Rental Property Break-Even Analysis: $586K Monthly Revenue Needed

Fixed costs $53.9K/mo Active cost base

Contribution margin 100% No variable costs

Break-even revenue $53.9K/mo Cover the base

Break-even timing Month 29 Model break-even

Break-even calculator

Test whether monthly rent covers direct property costs and fixed overhead.

Lean Base Full

Monthly revenue Rent collected each month sets the cash left for fixed costs. $ Low rent High rent Variable expenses Direct property costs that move with rented units. $ Low costs High costs

Money available to cover fixed costs $11,950 $14,150 revenue - $2,200 variable expenses

Margin ratio

84%

Covers fixed costs

$19,533 short

Fixed monthly costs Monthly overhead that break-even has to cover. $ Low overhead High overhead

Break-even chart Revenue Total costs

Which expenses stay fixed and which move with occupancy for this portfolio?

Cost classification

Break-even is only useful if fixed commitments are separated from vacancy-driven spend. With break-even at Month 29, misclassifying rent coverage, payroll, or turnover costs can make the model look safer than the cash plan really is.

Expense	Cost	Break-Even Treatment	Common Mistake
Property Insurance	Fixed	Include the $2,800/month premium in baseline rent coverage before testing unit-level margin.	Leaving insurance out until properties are leased.
Property Maintenance Reserve	Semi-variable	Keep the $1,200/month reserve in the model, then scale repairs by unit or vacancy event when data is available.	Treating maintenance reserve as optional cash.
Marketing and Advertising	Semi-fixed	Use the $1,500/month baseline, with step-ups during lease-up or vacancy periods.	Modeling leasing ads as a flat percent of rent.
Office Utilities and Supplies	Semi-variable	Start with the $600/month office baseline and separate office use from any owner-paid tenant utilities.	Bundling tenant utilities into office overhead.
Property Manager payroll	Fixed	Include the $65,000/year role, about $5,417/month, if hired before the portfolio reaches scale.	Excluding payroll until all units are stabilized.
Parkside and Sunset master-lease payments	Fixed	Include $4,700/month once both lease obligations are active, based on $2,200 for Parkside and $2,500 for Sunset.	Tying lease payments to rent actually collected.
Repairs, turnover, landscaping, tenant screening, and vacancy ads	Variable	Model by unit, lease turn, or vacancy event when operating data is available.	Hiding event-driven spend inside one flat overhead line.

How do lean, base, and full rental setups change break-even risk?

Scenario table

With no separate variable expense lines, break-even shifts with rent roll and fixed payroll. The lean case is close to break-even, the base case has a small cushion, and the full setup turns that cushion into a large monthly loss.

Planning figures only; actual occupancy, collections, and lease timing can move these results.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean lease-up	$14,150	$0	$15,600	100%	-$1,450	Still short of break-even before payroll.
Base steady-state	$20,550	$0	$18,100	100%	$2,450	Small cushion, but vacancy and payroll can erase it.
Full operator	$20,550	$0	$58,600	100%	-$38,050	Payroll makes this well below break-even.

What breaks the break-even plan for this rental property?

Stress test

The business is fragile twice over: the current rent roll is $20,550 against a $58,600 monthly commitment, and even before payroll the cushion is only $2,450.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$58,600	$38,050 gap	Full rent still leaves a large monthly gap.
Revenue shortfall	One $3,400 unit is vacant during renovation.	$58,600	$41,450 gap	One vacancy cuts rent and deepens the shortfall fast.
Fixed-cost pressure	Property insurance adds another $2,800 per month.	$61,400	$40,850 gap	Recurring overhead pushes the break-even line higher.
Margin pressure	The maintenance reserve doubles by $1,200 per month.	$59,800	$39,250 gap	Repair pressure trims a thin monthly margin.
Combined pressure	One $3,400 vacancy hits while insurance adds $2,800 and maintenance adds $1,200.	$62,600	$45,450 gap	Vacancy plus overhead pushes the plan further underwater.

What should you verify before closing the next rental property?

Founder checklist

The deal is ready only when signed rent covers the monthly fixed load, the renovation budget is funded, and cash stays above the floor. Keep Month 29 break-even separate from Month 60 payback; sale gains and tax benefits do not cover weak operating rent.

1Signed Rent$20.55K/mo

Verify actual signed leases hit the full scheduled rent of $20,550/month before you commit to the next buy or renovation, or the break-even math is built on hope.

2Fixed Overhead$13.4K/mo

Check that rent can carry the $13,400/month fixed load for office, insurance, legal, marketing, software, utilities, maintenance reserve, and bookkeeping.

3Rent Spread$15.85K/mo

Use the spread between scheduled rent and the $4,700/month master-lease cost to prove each rented unit still adds cash before payroll and other fixed costs.

4Build Reserve$315K

Reserve the full $315,000 construction budget and check vendor capacity first so the Month 4, 5, 8, 10, 13, 16, and 21 starts do not overlap badly.

5Purchase Capital$1.995M

Confirm you can fund the $1,995,000 owned-property purchase costs without leaning on operating cash, because those buys do not improve monthly break-even.

6Cash Floor$184K

Keep at least the $184,000 minimum cash buffer, delay hires if rent cannot cover payroll, and track Month 29 break-even separately from Month 60 payback.