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Break-Even Occupancy
An estimated occupancy threshold at which property income covers the costs included in a stated operating model.
Break-even occupancy estimates the occupancy level at which property income covers the costs included in an operating model. A common calculation adds operating expenses and debt service, divides that total by potential gross income, and multiplies by 100.
Use costs and income from the same period and state the model's assumptions. This income-based estimate is not observed unit occupancy or a guaranteed cash result. Different unit rents, concessions, and collection gaps can make a unit-count occupancy rate differ from the modeled threshold.
Source: Wall Street Prep, Breakeven Occupancy Ratio, Formula.
Frequently Asked Questions
Does break-even occupancy prove that every cash need is covered?
No. It covers only the costs included in the model. Separate cash needs must be identified before interpreting the result.
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