Break-even occupancy · Multifamily Strategy Community

Break-even occupancy

I learned some new term in the MFS hence wanted to share with you all.

Break-Even Occupancy (%) =

Operating Expenses + Annual Debt ServiceGross Potential Income

For example, let's say you're considering a 100-unit apartment building. It has operating expenses of $400,000 per year, annual debt service of $408,000, and gross potential income of $1.8 million.

First, add your expenses and debt service: $400,000 + $408,000 = $808,000. This is the minimum annual revenue you need just to break even.

divide that total by your gross potential income: $808,000 ÷ $1,800,000 = 0.449, or 44.9% which means anytime your 45 apartments out of 100 needs to be on the rent to cover all expenses.

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Break-even occupancy