Break Even Analysis
This calculates the break-even ratio. Enter the sum of the operating expenses and debt service. Enter the gross operating income.
100% is break even. A lower percentage means the property more than breaks even. A higher percentage means that the property does not generate enough income to reach break even.
Please do not use percentage or dollar characters or commas in the calculator.
ExampleThe operating expenses of a property you are considering are estimated at $157,209 for the first year. The debt service will be $163,771. The gross operating income is $329,472. What's the break-even analysis? It's 97.4%. Break EvenThe break-even analysis, sometimes used by lenders, shows how susceptible the property is to a decline in rental income. The higher the ratio, the more susceptible the property is to adverse fluctuations. This ratio is also known as the "default ratio," because it shows how close the debt service is to the property's ability to pay it. At 100%, the break-even ratio shows break even. Formula: (Operating Expenses + Debt Service) ÷ Gross Operating Income |