Break-even Occupancy

Break-even occupancy is the minimum occupancy rate a property needs to cover its operating expenses and debt service, with no cash left over. Occupancy below this level means the property is losing money after debt payments.

Example

With $1,060,000 in operating expenses, $518,936 in annual debt service, and $1,800,000 in GPR, this property needs 87.7% occupancy to break even.

Formula

(Operating Expenses + Annual Debt Service) ÷ Gross Potential Rent = Break-even Occupancy

Excel Formula:

• B7 = Operating Expenses
• B12 = Annual Debt Service
• B4 = GPR