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Sarah Martinez · Golden Key Realty

Does this rental actually make money?

Net operating income, cap rate, cash-on-cash return, monthly cash flow and the break-even occupancy — with vacancy, maintenance and capital reserves taken out, not wished away.

Rental property returns

Gross scheduled income$52,800
Vacancy−$2,640
Effective income$50,160
Property tax−$5,720
Insurance−$2,400
Maintenance−$4,013
Capital reserves−$2,508
Management−$4,013
Net operating income$31,506
Debt service−$31,926
Annual cash flow−$419
Debt service coverage0.99×
Break-even occupancyBelow this the property loses money96%
Rent as a share of priceThe old "1% rule" — rare in California0.85%

It loses $35 a month once vacancy and reserves are honest. That can still work if you are buying for appreciation and tax treatment, but it has to be a decision, not a surprise.

While you're here

Sarah Martinez, REALTOR®

Golden Key Realty · Lic. 02145678 · (818) 555-0142

Estimates only — not a loan quote, an appraisal, or tax advice. Talk to Sarah Martinez, a lender, and a CPA before you act on any of it.

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