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Break-Even Occupancy Calculator
Enter operating expenses, annual debt service, and gross potential income at full occupancy to find the occupancy where the deal breaks even.
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How to calculate break-even occupancy
Break-even occupancy = (Operating expenses + Annual debt service) ÷ Gross potential income × 100
Gross potential income is every site or unit full at market rent for a year. Break-even occupancy is the share of that you must actually collect to cover operating expenses and the loan, the point where cash flow is zero. At $320,000 of expenses, $185,000 of debt service, and $640,000 of gross potential, break-even is about 79%.
Why it is the safety metric
Every other metric asks how good the deal is; break-even occupancy asks how much room you have before it hurts. The gap between break-even and the occupancy you actually expect to hold is your margin of safety. A deal that breaks even at 79% and runs at 90% has real cushion; one that breaks even at 88% has almost none, and a soft season or a rate cut can push it underwater. It is the first number to check on a highly leveraged offer.
Questions
What is a safe break-even occupancy?
Lower is safer. Many investors want break-even comfortably below the trailing occupancy the property actually holds, often a 10 point or wider cushion. A break-even in the high 80s on a park that runs near 90% leaves little room for a bad season.
How does leverage change it?
More debt means more debt service in the numerator, which raises break-even occupancy and shrinks your cushion. It is the direct trade-off for the higher cash-on-cash return that leverage brings.
Should I use seller occupancy or my own?
Compare break-even against a conservative, trailing occupancy you can defend, not the seller's peak-season figure. Verifying occupancy against the rent roll is exactly the kind of check the full underwriting does for you.
Related calculators
These calculators are quick estimators for screening. A full RVP Underwriter analysis normalizes the seller's numbers, verifies occupancy, researches your county's taxes and insurance, and prices three offer structures against your DSCR and cash-on-cash targets. Run a deal free.