Rental Property

Real Estate

A rental property is real estate purchased to generate rental income — single-family homes, multi-family buildings (duplexes, triplexes, fourplexes), commercial properties, or vacation rentals. Returns combine cash flow (rent minus expenses including mortgage), appreciation, depreciation tax benefits, and principal paydown. Operating expenses: property management (8-12% of rent if outsourced), maintenance (1-2% of property value annually), property taxes, insurance, vacancy, capital improvements. The 1% rule: monthly rent should be at least 1% of purchase price for cash-flow positive. Rare in expensive markets. The 50% rule: half of rent typically goes to operating expenses (excluding mortgage).