How it works
How this tool works.
A property can look profitable on an annual pro forma and still be fragile month to month. What decides fragility is how much of each month’s income is already committed before anything goes wrong — the taxes, the insurance, the repairs, and above all the mortgage payment that arrives whether or not the rent does. The break-even ratio puts one number on that: the percentage of gross operating income consumed by operating expenses plus debt service.
Enter your monthly income, operating expenses, and debt service, and the calculator returns the ratio along with the dollar cushion left over. A property at 80% break-even keeps a fifth of its income as buffer; a property at 98% is one bad month from negative. Lenders commonly discuss break-even ratio when underwriting rental loans, though each sets its own standards — this tool computes your number, it doesn’t assert a pass/fail line.
Enter monthly gross operating income — rent plus any other income (parking, laundry, fees) you actually expect to collect.
Enter monthly operating expenses (taxes, insurance, repairs, management — everything except the loan) and monthly debt service (principal and interest; 0 if owned free and clear).
The tool divides total outflow by income: BER = (expenses + debt service) ÷ income, and shows the monthly cushion in dollars alongside it.
Read the result as headroom: the lower the ratio, the more vacancy or surprise expense the property can absorb before running negative. It’s an estimate from your inputs, not an underwriting verdict.
Make the result useful
Break-even-ratio analysis
Gross operating income is recurring income before operating costs and debt.
Operating expenses are recurring costs before financing.
Debt service is scheduled loan payment cost for the same period.
The ratio measures income committed to costs, not a lender approval outcome.
The assumptions that move this result
Income
Gross operating income for the period.
Expenses
Recurring operating costs.
Debt service
Scheduled loan cost.
Period
Matching period for all inputs.
break-even ratio = (operating expenses + debt service) ÷ gross operating income
Use the output as a documented scenario result, not a guarantee.
Read the number in context
Worked scenario
Scenario: ($1,100 + $1,900) ÷ $3,600 = 83.3%.
Edge case
Edge case: zero income makes the ratio unavailable, not safe.
Does not include capital projects or future income changes.
Before you act
• Use effective income if appropriate.
• Test lower rent and higher costs.
• Compare with cash reserve needs.
Worked formula
break-even ratio = (operating expenses + debt service) ÷ gross operating income
Is this a forecast?
No. It calculates the assumptions you enter.
Can it replace professional review?
No. Use current records and qualified advice.
What should I save?
Keep the assumptions and source records used for the decision.