Is renting single family homes no longer profitable?

Housing costs are inflated and mortgage rates are high. Yes it costs too much to be a landlord for now. But anyone who got in 6+ years ago is doing fine

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unless it's a fixer upper priced right.

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Too many fixer uppers trying to use a recently flipped house to establishing their asking price in the market right now

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They bought 2 new construction houses for @300K each

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way too much for a functional/profitable rental. just dumb.

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Rent they're collecting is 2100/mo.

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and there it is. a sub 1% RTV. all mine are 1.5% to 2% RTV.

i sold 4 last year and 1 this year thus far.

the issue is they do not know how to calculate positive cash flow or COC return which is what matters in these types.

another issue is if you cannot buy right then do not buy at all. lots of things went to shite from covid on. rent ready expenses, maintenance expenses, plus interest rates went through the roof.

now if you got in when i did i was able to go from very good PCF to great by raising rents and getting cheaper insurance policies plus great PM rates.

however even getting in at the right time with great numbers still does not mean you cannot take a beating or have a bad year. a combo of a few evictions, rent ready fees and some big maintenance can hurt your cash flow.

if you bought wrong it can knock you to your knees. you need to know WTF you are doing.

Are you selling all of yours? I’m still finding a few deals but are harder to find. I’m still buying about 2 a year.

If you are just starting out, it’s pretty much impossible right now. For someone who really know how to identify deals, renovate properly, pick good areas, etc. they can still make it work. The better thing right now is definitely putting your money into the S&P 500, but interest rates may eventually go down and home prices and rent could go up and we might be sitting here saying it would’ve been nice to buy in 2026.

It depends on what your goal is. I mostly have owned commercial property but used the same strategy for both. My goal was not to have a cash flow income from the properties, I already had a day job. It was to have enough rent to cover the payment and all expenses. It always worked out that extra money was available to pay myself some but I viewed it as investing just the down payment to eventually obtain a paid off property. I invested with a couple of friends to allow more expensive properties to be purchased and to help cover expenses if major work had to be done that required a subsidy. For example, we each threw $50K in to buy a dollar store building about 15 years ago (one third of the down payment each). It is paid for now and we have it listed for sale for about $1M. So for my $50K investment 15 years ago, I will get about $333K. It is an alternative to just investing in the stock market.

It’s only worth it if you paid of the mortgage. But when you see the money it goes to taxes and insurance it’s annoying.


I had a two unit that I bought 15 years ago or so. It’s paid off. Here’s the numbers. 2500 in rent total. That’s 27500 yearly with 1 month vacancy. 4k to insurance, 3500 to insurance. Now I’m left with 20k. Ac goes out(and they do), fridge and washer don’t work, drain like gets clogged $300. I have 2 unit so it’s 2x likely something doesn’t work. Termite spray, yard $45 for each cut, minor repairs, major repairs(fence replacement, siding), interior painting, misc. I might end up at end of year +11k.

I roll my eyes when people just over simplify things with just pay 20% down payment, get tenants and collect. I’d say the real payoff is when you’re ready to sell the property after it has appreciated and paid off using the rent money. Other than that don’t expect much with making money each month.

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It’s only worth it if you paid of the mortgage.

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completely inaccurate. stop speaking in absolutes. That is your opinion and not facts. that is your emotional experience speaking relative to you.

if you did not make it work with a mortgage then you bought wrong like i have elaborated on forever. my cash flows on paper, were very good to great WITH a mortgage. without? of course even greater. you should not need it paid off to cash flow well.

prices have gotten so high it has hurt RTV's and expenses i described above post covid have hurt cash flows regardless. cash flows WILL fluctuate based on issues i laid out above in an earlier post. tax benefits are great early on but as you make more money they get phased out and turn into suspended losses you carry forward. the income limit for deductions is far too low(unless you are a RE professional). My CPA even bitches about it all the time.

it also depends on how many properties you have. the old saying is you either have 10 or more or you have nothing. you need a buffer for big hits.

i see newbies buying with a .7 RTV. that is nuts. especially with todays expenses. you are begging to get wiped out if you all of a sudden have some evictions, then pay a ton to get it rent ready and then replace a HVAC or roof. or both all at the same time. i have seen it all. i have replaced corroded sewer lines and even had a kitchen fire i think a tenant did intentionally after i evicted her. 1% RTV minimum is the golden rule.

you have to crunch the numbers to see if it is worth it.

i sold plenty of mine because they appreciated greatly and i wanted to tap the suspended passive losses i cannot use unless i sell.

LINK

I never jumped in but thought about it many times. I always liked to gauge purchase opportunities against the “1% rule,” but I don’t even see that possible these days. And, to be honest, even that situation is a modest RoR. That’s an RoR of 12% plus appreciation BEFORE loan interest, taxes, maintenance, and stress. Thats a pretty measly return. With that said, who knows what the future holds?

With the cost of homes for quite some time as long as you dont live in some redneck low income town where homes are dirt cheap...

take alot of cash up front for for the monthly rent to be positive "in the green" cashflow....

You dont make money on the rent, you make your money on the appreciation of the home, while someone else is paying the majority of the mortgage.

Nothing new....