Most rentals that look like they cash flow on the listing are not lying to you. They are just missing things. The rent is real, the mortgage is real, and the gap between them looks like profit until the costs nobody put in the spreadsheet start showing up.
These are the six that go missing most often. None of them is exotic. Every one of them shows up eventually.
1. The rent is the listing's guess, not a lease
The rent on a listing is usually an automated estimate or the seller's hope. Neither is a signed lease. The number that matters is what similar homes nearby actually rented for recently, in the same condition, with the same bedroom count.
If you only change one input before making an offer, make it this one. An optimistic rent inflates every other number downstream, and it is the input sellers have the most reason to round up.
2. Property taxes reset after you buy
The tax bill on the listing is the seller's tax bill. In many states the assessment resets toward your purchase price after the sale, and the seller may have had a homestead exemption you will not get as a landlord. The tax line can jump in the first year of ownership, and it stays up.
Look up how your county reassesses on sale, and budget taxes on your price, not theirs.
3. Landlord insurance is not homeowner insurance
A rental needs a landlord policy (often called a DP-3), not the homeowner policy the seller carried. It usually costs more, and in a lot of markets premiums have been rising fast. Get an actual quote for the address before you trust any insurance number, including your own.
4. Vacancy happens even with great tenants
Tenants move. Between one lease and the next there is cleaning, paint, showings, and a month or so of no rent. One empty month a year is already about 8% of the rent gone.
Budgeting zero vacancy is really betting that nobody ever leaves. Budget 5% to 8% even in a strong rental market.
5. Repairs, and the big things you have not replaced yet
Two different costs hide in here. Repairs are the small, constant stuff: a leaking faucet, a broken garage door opener, a clogged drain. Capital expenses are the big, rare things: a roof, a furnace, a water heater. The capital expenses feel like they will never come, right up until they arrive all at once.
A common starting point is 5% of rent for each, more for older houses. It feels like money you are throwing away. It is actually the roof, paid in monthly installments.
6. Management, even if you plan to do it yourself
Self-managing is a choice, but it is not free. It costs your evenings, your weekends, and the 11pm call about the water heater. Budget for a property manager anyway, typically 8% to 10% of rent, even if you never hire one. If the deal only works when your time is worth nothing, it doesn't really work. And if you ever want a second or a fifth property, you will be hiring one.
One deal, six ways to lose it
Here is how little it takes. A $400,000 house, 25% down at 6.75%, listed at $2,600 a month in rent. The plan is the way a lot of first deals get run: 3% vacancy, about 5% of rent for repairs and replacements, the seller's $2,800 tax bill, a $1,500 homeowner insurance quote, and no management because you will do it yourself.
On that plan, the deal makes $92 a month on $108,000 of cash invested. Positive, and that is usually where the math stops.
Now change one thing at a time, and leave everything else exactly as planned:
| What changed | Monthly cash flow | Deal score |
|---|---|---|
| The plan | +$92 | 53 · Workable |
| It leases for $2,450, not $2,600 | −$46 | 43 · Risky |
| Taxes reset to $4,400 after the sale | −$42 | 43 · Risky |
| The landlord insurance quote is $3,000 | −$33 | 43 · Risky |
| One month empty between tenants (8% vacancy) | −$32 | 43 · Risky |
| Repairs and replacements at 10% of rent, not 5% | −$34 | 43 · Risky |
| You hire a manager at 8% | −$110 | 41 · Risky |
| All six at once | −$714 | 27 · Risky |
Every one of them, on its own, turns a deal that pays you into one that costs you money every month. None of them is a disaster. A slightly lower lease, a normal tax bill, a real insurance quote. That is the whole point: when the margin is $92, the ordinary stuff is enough to erase it.
We ran every row through REIzer's rental engine, the same one behind the rental analyzer. Swap in your own deal and see how much room it really has.
What's left
Put all six back and take another look at the monthly cash flow. If it is still positive, you probably have a deal worth a closer look. If it is not, you have not wasted anything. You found out before the offer instead of after closing, which is the cheapest time to find out.
That is also the honest way to use this list in a negotiation. The question is not whether the house is nice. It is what price still works once every real cost is in, and whether the seller will take it.
REIzer's rental analyzer fills in vacancy, repairs, capital reserves and management by default and shows you each line, so nothing on this list can quietly go missing. It also stress-tests the deal against lower rent, higher rates and more vacancy, which shows how much room you have when one of these costs comes in higher than you planned. Our cap rate and NOI page covers exactly which expenses belong in the calculation.