[quote=danthedart]Historically the cost of operating a rental unit is 45%. So in order to rent out a home for a profit each month, 55% of rent needs to cover your mortgage plus taxes.
In otherwords, its very difficult for a SFR to be cash flow positive. [/quote]
I, for one, believe in the 45% operating costs number. However, I think it includes the tax payment since that is also part of your cost basis (the mortgage however is not a necessary part since you can always pay cash).
And you don’t compare the 55% rental income directly with mortgage because you need to factor in vacancy, which could easily be 5-10%.
Also, while it is the average, there are many ways to lower it just like in any other properly managed business. So it would be no surprise some people here have a lower number. But I use that figure to judge whether a property is attractive or not as a rental as well.
It is not easy for SFR to be cashflow positive at the beginning (if a major maintenance event showed up), but it would be easy after years for high inflation.
