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.
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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