Breakeven Occupancy: The "Sleep at Night" Metric
**Breakeven Occupancy** tells you exactly how empty your building can become before you have to pay the mortgage out of your own pocket. If your breakeven is 75% and you are at 95% occupancy, you have a massive "safety net" of 20% vacancy.
Why Lenders Hate High Breakevens
Most commercial lenders cap breakeven occupancy at **80-85%**. Why? Because if a market downturn hits and rents drop by 10% or vacancy spikes, a property with a 90% breakeven will almost certainly go into foreclosure. A low breakeven point protects the lender as much as the owner.
Calculating the Cushion
To find your safety cushion, subtract your **Breakeven Occupancy** from your **Current Occupancy**. *Example:* 92% (Current) - 78% (Breakeven) = 14% Margin of Safety. If you lose more than 14% of your tenants, you are in the red.