2012201320142015201620172018201920202021
The numbers below are from the current analysis. Ratios do not take into account all of the cash flows, and are not a discounted cash flow measure like NPV, hence do not reflect the true yield for the analysis. Cash flows with the * symbol are partial years where the partial number has been divided by the number of months and multipled by 12.
Total Operating Expenses\$55,469\$57,780\$60,203\$62,743\$65,405\$68,197\$71,126\$74,198\$77,421\$80,803
+ Debt Service\$130,583\$130,583\$130,583\$130,583\$130,583\$130,583\$130,583\$130,583\$130,583\$130,583
/ Total Gross Income\$200,400\$210,420\$220,941\$231,988\$243,587\$255,767\$268,555\$281,983\$296,082\$310,886
= Breakeven Occupancy92.8%89.5%86.4%83.3%80.5%77.7%75.1%72.6%70.3%68%

Breakeven Occupancy is the Total Operating Expenses plus Debt Service all divided by Total Gross Income, expressing the percentage occupancy necessary to pay for the expenses and debt service. If the Total Gross Income goes up relative to the Total Operating Expenses plus Debt Service then the percentage occupancy needed to make the net operating cash flow breakeven (\$0) will go down.

Considers:
• Scheduled Income (Current Year Only), Debt Payment (Current Year Only), Vacancies (Current Year Only), Expenses (Current Year Only)
Ignores:
• Sale Proceeds

... and a lot of other things
Why is Breakeven Occupancy useful?

For a quick look at how stable a property will be during the projected cash flow, look at the Breakeven Occupancy each year. A real estate investment might be very good, but still have a rough year or two if a lot of the leases are rolling over. The Breakeven Occupancy will show if there are years that you might need reserves for.

What is the Breakeven Occupancy Sensitive to:

Scheduled Income (Current Year Only), Debt Payment (Current Year Only), Vacancies (Current Year Only), Expenses (Current Year Only)