- Determine the debt service for the property.
In this case we'll assume an annual debt service of $32,000
- Determine the annual operating expenses for the property.
In this case, we'll assume that management and direct operating costs annually are $47,000.
- Calculate the annual gross operating income of the property.
We'll assume a gross operating income of $98,000 annually.
- Add Debt Service to Operating Expenses and divide by Operating Income:
$32,000 + $47,000 / $98,000 = .81 or an 81% Break-Even Ratio.
What You Need
- Or get the spreadsheet below.