👋How do you calculate Breakeven Occupancy?

📈How do you calculate Breakeven Occupancy?

Expressed as a %, B.O. shows how much physical vacancy the property can handle to break even, in a worst case scenario.

So if the property went down to X% occupancy, the sponsor can still pay all of the expenses and pay the mortgage.

The formula:
(OpEx + Debt + Fees) / Collected Income

Most investors would agree anything between 60% and 80% is acceptable.

Are you calculating B.O. in your underwriting model?