Real Estate Math
A Texas investor wants to determine the 'break-even occupancy rate' for a rental property. Annual fixed expenses are $24,000 and potential gross income is $60,000. What occupancy rate must be achieved to break even?
A30%
B40%✓ Correct
C60%
D25%
Explanation
Break-even occupancy = Fixed Expenses / Potential Gross Income = $24,000 / $60,000 = 0.40 = 40%. The property must be at least 40% occupied to cover fixed expenses. At 40% occupancy, revenue equals expenses (break-even).
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