How is break-even rent different from cashflow?

Cashflow asks "how much do I clear given the rent I'll charge?". Break-even asks "how much do I need to charge to clear zero?". Use break-even when you're evaluating an offer; use cashflow when you have a known rent figure.

Should I add a vacancy buffer?

It's already baked in. Set your expense ratio at 35–40% and you've implicitly reserved 5–8% for vacancy. For a stricter break-even, push the ratio to 45% — that's a useful stress test.

What if my break-even rent is above market rent?

It means the property doesn't pencil at the price you're considering. You have three options: negotiate the price down, put more cash down to lower the mortgage, or walk away. Don't bridge the gap with optimistic rent assumptions.

Does this include capital reserves?

Implicitly, via the expense ratio. A 35% ratio typically allocates ~5% to maintenance and another ~5% to capital reserves. For older buildings, push capital reserves to 10% — your roof, windows, and water heater will eventually want their share.

How does a higher interest rate change break-even rent?

Linearly. A 1-point rate increase (e.g., 5.25% → 6.25%) raises a $440k 25-year mortgage payment by about $260/mo, so break-even rent rises by ~$400/mo (the gross-up for expenses). Stress-test at +1% before committing.

Because individual unit asking rents are how you'll actually market the property. A $4,000/mo duplex break-even is two $2,000 units. If comparable 5½ apartments in the area rent for $1,700, you're $300/mo short per door — that's the gap to close.

Is break-even rent the same as the 1% rule?

No. The 1% rule says monthly rent should be 1% of purchase price — a quick screen, not a financial calculation. Break-even rent is the actual minimum given your specific financing and operating costs. Use both: the rule for a 5-second pass, the calculator for the real number.

Break-even · Pricing

The rent this deal needs to make.

Punch in price, financing, and your expense assumption. We solve for the gross monthly rent that gets you to zero — and divide by doors so you know what each unit needs to clear.

Assumptions

Purchase price

Down payment

Mortgage rate

AmortizationNumber of units (doors)

Operating expense ratio

Share of gross rent eaten by taxes, insurance, vacancy, maintenance.

Results

Break-even gross rent

$4,034/mo

Per door$2,017/mo

Mortgage payment$2,622/mo

Foncier the whole deal

This number is one of seventy.

Cap rate is a start. The full Foncier analyzer adds DSCR, IRR, ten-year cashflow projections, scenarios, side-by-side compare, and live community rent comps — for free, on your first three deals.

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How this is calculated

Solves for the rent R where R × (1 − expense ratio) = mortgage payment. Implicit assumption: operating expenses scale with rent, which is fair for vacancy and management but conservative for fixed costs (taxes, insurance).

Worked examples

How much rent does the property actually need?

Plateau duplex · 5% down

$3,810 / month total

A $625,000 duplex in the Plateau with the minimum 5% down. CMHC-insured at 5.25% over 25 years, 35% expense ratio. The property needs $3,810/mo gross rent to break even — about $1,905 per door.

Mortgage$3,711/mo

Per door$1,905

Loan$617,500

CMHC4.0%

Longueuil triplex · 25% down

$3,386 / month total

A $510,000 triplex in Longueuil with 25% down conventional financing at 5.50% over 25 years, 32% expense ratio. The break-even gross rent lands at $3,386/mo — $1,129 per door.

Mortgage$2,302/mo

Per door$1,129

Loan$382,500

CMHCNone

Break-even questions

About rental break-even rent.

The minimum gross monthly rent the property needs to cover the mortgage payment plus operating expenses. Below it, you're subsidising the property out of pocket. At it, cashflow is zero. Above it, you're cashflow-positive.

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