Break Even Rent Calculator
Calculate the minimum rent needed to break even on a rental property.
Cover your mortgage, taxes, insurance, and maintenance costs.
Break-even rent is the minimum monthly rent you must collect to cover every dollar of property expense — with zero cash flow profit or loss. Knowing this number before you purchase a rental property is essential: if market rents in the area are below your break-even, the property will lose money every month regardless of appreciation.
Core formula:
Break-Even Rent = Total Monthly Expenses / (1 − Vacancy Rate − Management Fee Rate)
Variable definitions:
- Total Monthly Expenses — the sum of all fixed monthly property costs (see below)
- Vacancy Rate — the percentage of months where the property sits empty (typically 5–10%)
- Management Fee Rate — the property manager’s monthly charge as a % of rent (typically 8–12%); enter 0 if self-managing
- The denominator — adjusts for the fact that not all potential rent is actually collected; vacancy and management fees reduce effective income
Monthly expense breakdown:
| Expense | Notes |
|---|---|
| Mortgage (P&I) | Principal + interest payment |
| Property taxes | Annual / 12 |
| Insurance | Annual / 12 |
| HOA fees | If applicable |
| Maintenance reserve | Typically 1% of property value / 12 |
| Utilities | If landlord-paid |
Worked example: Monthly costs: Mortgage $1,400, taxes $250, insurance $100, maintenance reserve $150 = $1,900/month Vacancy rate: 7%. Management fee: 10%.
Break-even rent = $1,900 / (1 − 0.07 − 0.10) = $1,900 / 0.83 = $2,289/month
If comparable properties in the area rent for $1,950/month, this property will lose $339/month — or about $4,068/year — from day one.
Interpreting the result:
- Market rent > break-even: Positive cash flow — the property can sustain itself
- Market rent = break-even: Zero cash flow — any vacancy or unexpected repair creates a loss
- Market rent < break-even: Negative cash flow — property depends entirely on appreciation to justify ownership
Improving break-even without raising rent:
- Increase down payment to reduce mortgage (most effective)
- Refinance at a lower rate
- Self-manage to eliminate the 8–12% management fee
- Appeal property tax assessment if overvalued
- Shop insurance annually for better rates
Cash-on-cash return (bonus metric):
Cash-on-Cash Return = Annual Cash Flow / Total Cash Invested × 100
A healthy rental property typically targets 6–10% cash-on-cash return.