How much discount is required to cash flow?

Question for landlords,

I am wondering how much discount in general is required when purchasing a single family home in order to break even on cash flow from rent. I am trying to think of all possible operating expenses, vacancies, and of course the underlying mortgage payment. Is 15% discount typically enough to cash flow a property or are we talking more like a 30-40% discount to do it? I realize that each market is different…i’m just talking ballpark figures. Thanks so much for your insights!


You answered your own question when you wrote that “each market is different”. Here in south Florida, if I buy a SFR at anything more than .50 on the dollar, I am in the hole each month. And even that isn’t a guarantee of positive cash flow.

Thanks AJ290,

Where I live, if I buy a SFR at 170k I can command about $1200/mo plus utilities from a renter. How does your market compare to that? Are you able to get that much rent or is it much less than that?



The median price for a SFR in my county is around $365K. That typical house will have property taxes of around $6K/year, and homeowners insurance of around $5K year. The rent? Figure around $1,800/mo. Do the math. It ain’t pretty.


If your proposed rent is $1200/month, then you need to allow about 45-50% of that as operating expenses (that’s vacancies, maintenance, repairs, etc). That does NOT include debt service (your loan payment).

You’d have roughly $600/month in operating expenses which would leave you $600/month to cover your mortgage payment (that is, if you wanted breakeven cashflow).

Following that, you’d need to buy a property for approx $80K or less, assuming a 30 year note at 8%.