Property Management
The 'break-even ratio' for an income property is calculated as:
ANOI ÷ Debt Service
B(Operating Expenses + Debt Service) ÷ Gross Potential Income✓ Correct
CVacancy Rate ÷ Gross Income
DNet Income ÷ Total Investment
Explanation
The break-even ratio shows what occupancy rate is needed to cover all operating costs and debt service: (Operating Expenses + Annual Debt Service) ÷ Gross Potential Income. Below this occupancy, the property operates at a loss.
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