[jjav]

There's quite a bit of optimism in those numbers.

I bought a house in the Bay Area in the 90s and the mortgage was well over $3K (remember interest was over 7%) and an equal house back then was renting for $1300 (my rent at the time for a 3br house in south San Jose).

Try to run the numbers for any property you like. Remember to include taxes and insurance and maintenance. Just to break even is not easy and then you'll have to work for free on the maintenance. Or pay a rental management company, which is another 8-10% taken from the rent.

[pixelatedindex]

Your house now can be rented for 4-5K a month if not more, you have no mortgage. Your property taxes are capped at purchase price due to Prop 13. All said and done can’t you net like 35-40K or so per year on a single home?

I agree that buying a home and immediately putting it up for rent would put you underwater these days but during ZIRP times rent and mortgage weren’t too far from each other.

[jjav]

> Your property taxes are capped at purchase price due to Prop 13.

BTW this is a common myth but not true. Property taxes are set by purchase price in year zero when you buy it. Every year after that, they go up 2% compounding.

That's not the full story because the city/county can also add any extra fees they like, and raise them, prop13 does not apply. My taxes go up by well over 2% every year.

> All said and done can’t you net like 35-40K or so per year on a single home?

If you can find yourself a free house somehow, that feels about right. But how do you get yourself a free house? If you have to buy it, now you have a mortgage, and the math no longer works.

The only people I know who profitably rent out homes are those who inherited a home with no debt. In that case, yes it works.

> during ZIRP times rent and mortgage weren’t too far from each other

Low interest helps, for sure, but the numbers still didn't work out.

Here's a graph of interest rates: https://fred.stlouisfed.org/graph/?g=1KZYI

The rates only briefly dipped below 3% during the pandemic. Let's say you got the timing right and got a 3% mortgage for 1.2M. The payment is still a bit over $5K/mo. That's just the mortgage, add insurance + taxes + maintenance. On a home you can rent out for maybe 4K-4.5K/mo. Losing money every month.

I've been running these numbers every few months for the last two decades hoping to follow the common advice to buy rental property and become rich. But it has always been cash flow negative no matter what the rents and interest rates have been.

Only advice I have is go inherit a free house, that can be profitable.

[pixelatedindex]

Pretty insightful details actually, I’ll rethink some of my positions. But I can’t imagine these bigger landlords taking that much of a hit, especially with multiple properties. Like let’s say I bought a home before meeting my significant other who also has a home - then I only need one place and I can rent out the other. Once both are paid off you have significant leverage. I don’t think you necessarily need a “free” house