The Rental Math Nobody Shows You

13 Jun 2026 · 1 min

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In this excerpt, Steve D. Valentine explains the cash‑flow math for a $300,000 rental property purchased at age 60. He shows that the property generates $22,800 in gross annual rent, which after deducting roughly 35 % for taxes, insurance, and routine repairs leaves about $1,482 per month in net cash flow. He emphasizes that this cash flow can be sharply reduced by large, unexpected repairs—illustrated by a $6,000 air‑conditioning replacement that would cut the monthly cash flow. He then notes that the resulting cash‑on‑cash return is under 3 % before accounting for depreciation and other tax benefits, highlighting how thin the margin can be.

But at age 60, if you're buying a $300,000 rental property, you're getting $22,800 in annual gross income. And after 35% for taxes, insurance, and repairs, you net $1,482 a month in cash flow. Now, this cash flow is subject to change based on the repairs in this property. So if an AC goes out here, this $1,482 a month just went down by $6,000. Then when you take your return in, this is less than 3% plus your depreciation, your tax benefits.