break-even ratio

Definition

The percentage of gross income needed to cover operating expenses and debt service, revealing how close a property teeters to financial disaster. It's the fiscal tightrope number—anything approaching 100% means you're one vacancy from trouble.

Example Usage

With a break-even ratio of 92%, the property had little margin for error if tenants stopped paying or unexpected repairs hit.

Origin

Investment analysis terminology combining break-even concepts with ratio analysis

Fun Fact

Most lenders want break-even ratios below 85%, giving a 15% cushion for Murphy's Law to do its thing.

Source: Real estate investment analysis terminology

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