Break-Even Occupancy Calculator
Break-Even Occupancy = (Operating Expenses + Debt Service) ÷ Gross Potential Income × 100
The occupancy you cannot fall below
Break-even occupancy is the occupancy level at which a property exactly covers its operating expenses and debt service. Below it, the owner funds the shortfall out of pocket.
Worked example
$380,000 operating expenses plus $610,000 debt service against $1,200,000 gross potential income:
($380,000 + $610,000) ÷ $1,200,000 = 82.5%
The property survives down to 82.5% occupancy. That is a 17.5-point cushion — adequate, not generous.
How to read the result
- Below 75% is a comfortable cushion for most stabilised assets.
- 75–85% is workable but leaves limited room for a tenant departure.
- Above 85% means a single vacancy can put the property underwater.
- Above 100% means it cannot cover obligations even fully leased at current rents.
Why it matters more than the headline occupancy
A building that is 95% leased sounds safe. If break-even is 92%, it is not — one tenant leaving breaks it. Read break-even alongside the lease expiry profile and tenant concentration, not in isolation.
Build the inputs with the NOI calculator and size the debt with DSCR.