Fixed Costs

Costs that do not change based upon of the property’s level of occupancy or operation. For example. the landlord’s monthly insurance premiums will generally remain fixed regardless of whether the property is 50% or 80% occupied. In some real estate financial models, the user is given the option to choose what percentage of a given expense is fixed with items such as insurance and taxes deserving 100% fixed treatment. This is in contrast to Variable Costs, which do vary with the property’s level of operation.