I agree with 4plexowner – the savvy investors know that, depending on financing costs, an annual multiplier in the 8-10 range will usually throw off a little cash as long as the property doesn’t need a lot of maintenance and they don’t get the tenant from hell. Since they don’t live in these properties, an investor doesn’t (legitimately) qualify for the lending programs with the 95% financing terms so they have to put in more cash. Property taxes and long term maintenance costs have to come out of the rental payments, too.

A $500,000 purchase price results in $450+ per month in property taxes – that’s a lot of money to pay out of a $1,700 monthly rental rate.