Why real estate has a break-even point
Buying and selling property is expensive. Purchase closing costs, plus agent commissions and closing costs when you sell (often 6–10% of the sale price combined), mean a property usually has to appreciate or build equity for a few years before a sale leaves you ahead.
The break-even year is the first year in which your net proceeds from a sale — after selling costs, loan payoff and taxes — plus the cumulative cash flow you have collected exceed the cash you originally invested.
What drives the break-even year
Appreciation and principal paydown build equity; positive cash flow adds to your return each year; and depreciation lowers your taxes while you hold but increases recapture when you sell. Higher closing and selling costs push break-even further out.
The calculator also shows 5- and 10-year total returns, so you can see not just when a property pays off but how much it earns if you hold it longer.
Frequently asked questions
How long does it take to break even on a rental property?
It depends on appreciation, cash flow, financing and transaction costs, but with typical selling costs of 6–10% it often takes several years. Use the calculator with your own numbers.
Does break-even include taxes?
Yes. Net proceeds account for selling costs and the estimated tax due on sale, including depreciation recapture.
What if a property never breaks even?
That usually means cash flow is negative and appreciation assumptions are low relative to transaction costs. Revisit the purchase price, rent or financing in the ROI and mortgage calculators.
More real estate calculators
For informational purposes only. Tax rules change and depend on your situation — consult a tax professional or financial advisor before making investment decisions.