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Break-even occupancy calculator.

How empty can a building get before it stops covering its own costs? Break-even occupancy is the percentage of rent you must collect to pay operating expenses and debt service — the deal’s margin of safety.

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Break-even occupancy
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Break-even occupancy = (operating expenses + debt service) ÷ gross potential rent. If break-even is 80%, you can lose up to 20% of your rent before the property goes cash-flow negative. Lower is safer — a break-even above ~90% leaves almost no cushion for vacancy or rollover.

Reading your margin of safety

Break-even occupancy is a deal’s margin of safety expressed as a percentage: the share of potential rent you must actually collect to cover operating expenses and debt service. It equals operating expenses plus debt service, divided by gross potential rent. The lower it is, the more vacancy the property can absorb before the owner starts feeding it.

Example. A building with $315,000 of gross potential rent, $90,000 of expenses, and $161,500 of debt service breaks even at about 80% occupancy. That leaves a 20-point cushion — you could lose a fifth of your rent before going cash-flow negative. A break-even above 90% would mean almost no room for a single tenant to roll.

Frequently asked questions

What is break-even occupancy?
It’s the occupancy level at which a property’s income exactly covers its operating expenses and debt service — no profit, no loss. Above it the property is cash-flow positive; below it the owner feeds the deal out of pocket.
What is a good break-even occupancy?
Lower is better because it’s a bigger safety margin. Many investors like to see break-even in the 70s or low 80s percent so the property can absorb normal vacancy and a tenant or two rolling without going negative. Above ~90% is risky.
How do I lower break-even occupancy?
Raise rents, cut operating expenses, or reduce debt service (smaller loan, lower rate, longer amortization). Each widens the gap between what you must collect and what the building can produce at full occupancy.

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Estimates are for planning only and use simplified assumptions — not tax, legal, or investment advice. Verify with your lender, CPA, and a full broker analysis before acting.