Calculator
Breakeven Occupancy Calculator for Rental Property
Breakeven occupancy is the occupancy rate at which a property's income just covers operating expenses plus debt service. It equals operating expenses plus debt service, divided by gross potential income. The lower the breakeven, the more vacancy the property can absorb before cash flow turns negative.
Formula
How underwriters use it
Breakeven occupancy turns DSCR into a question an operator can feel: how empty can the building get before we write a check.
Lenders and equity investors compare it with market and submarket vacancy history; a breakeven within a few points of current occupancy is a warning sign.
Frequently asked questions
What is a good breakeven occupancy?
Many investors and lenders like to see breakeven occupancy around 85% or lower for stabilized multifamily, leaving a meaningful cushion to typical occupancy. Higher breakevens may be acceptable for short-term transitional loans with reserves.
Does breakeven occupancy include capital expenditures?
The basic version does not. A stricter version adds replacement reserves or planned capex to the numerator, which raises the breakeven and is a better test for older properties.
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