Property Management
The 'break-even ratio' for an investment property represents:
AA. The point at which the property has no profit or loss
BB. The occupancy rate required to cover all operating expenses and debt service✓ Correct
CC. The ratio of income to expenses at the point of sale
DD. The loan-to-value ratio at which mortgage insurance is no longer required
Explanation
The break-even ratio = (Operating Expenses + Debt Service) ÷ Gross Income. It indicates the occupancy rate needed to meet all financial obligations. Properties with lower break-even ratios have more cushion against vacancy risk.
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