{"id":188760,"date":"2026-07-22T10:38:51","date_gmt":"2026-07-22T16:38:51","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=188760"},"modified":"2026-07-22T10:38:54","modified_gmt":"2026-07-22T16:38:54","slug":"most-mom-and-pop-landlords-lose-money","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/most-mom-and-pop-landlords-lose-money","title":{"rendered":"Most Mom-and-Pop Landlords Lose Money\u2014Here’s Why, and What to Do Instead"},"content":{"rendered":"

According to the media and average Americans, landlords are all rich, lazy leeches growing fat off of honest workers.\u00a0<\/span><\/p>\n

It\u2019s an easy narrative to spin. Too bad the numbers prove it\u2019s not true in the slightest.\u00a0<\/span><\/p>\n

Most landlords actually lose money. I did, back when I still bought properties directly.\u00a0<\/span><\/p>\n

Here\u2019s why so many landlords quit\u2014and a few alternative ways to invest for the same <\/span>cash flow<\/span><\/a>, <\/span>appreciation<\/span><\/a>, and <\/span>tax benefits<\/span><\/a> without all the headaches and costs.\u00a0<\/span><\/p>\n

Average Landlord Size<\/span><\/h2>\n

What\u2019s the most common portfolio size among landlords?\u00a0<\/span><\/p>\n

To hear the media tell it, you\u2019d think those evil landlords own entire blocks and neighborhoods. But a study by <\/span>Doorloop<\/span><\/a> found the most common portfolio size is exactly one unit (42% of landlords).\u00a0<\/span><\/p>\n

That\u2019s right: Most landlords own just one unit.\u00a0<\/span><\/p>\n

Another 33% of landlords own two to four units (often a single property), and another 16% own five to 10 units. That means 91% of landlords own 10 or fewer units.\u00a0<\/span><\/p>\n

In fact, a quarter of landlords never intended to own rentals in the first place. They became accidental landlords when they struggled to sell their home and ended up just renting it out instead.\u00a0<\/span><\/p>\n

That\u2019s hardly the stereotype of a rich, greedy landlord that owns hundreds of units \u201cexploiting the working man.\u201d<\/span><\/p>\n

Soaring Costs<\/span><\/h2>\n

You already know that home prices soared <\/span>55% between 2020 and 2025<\/span><\/a>. But that\u2019s not the only ownership cost that\u2019s surged.<\/span><\/p>\n

Property insurance premiums spiked <\/span>24% between 2021 and 2024<\/span><\/a>. <\/span>Property taxes<\/span><\/a> are <\/span>up 30% since 2019<\/span><\/a>. As for building material prices, they\u2019ve exploded <\/span>44% since 2020<\/span><\/a>.<\/span><\/p>\n

Meanwhile, rents are down around 5% over the last year, per <\/span>Zillow<\/span><\/a>.\u00a0<\/span><\/p>\n

The bottom line? It\u2019s much harder to make rental properties pencil strong cash flow than it was before the pandemic.\u00a0<\/span><\/p>\n

Landlord Results<\/span><\/h2>\n

The Doorloop study found only a third (35%) of landlords say their properties are profitable year after year. The other two-thirds see only intermittent profits\u2014or consistent losses.\u00a0<\/span><\/p>\n

This is precisely why <\/span>just<\/span> 44% of landlords <\/span>have any interest<\/span> in buying more rental properties.<\/span> And even that unassuming number is up from a shoddy 35% in 2023.\u00a0<\/span><\/p>\n

Landlords aren\u2019t exactly hitting it out of the park\u2014or clamoring to keep playing the game at all.\u00a0<\/span><\/p>\n

Why Most Landlords Don\u2019t Want More Units<\/span><\/h2>\n

I\u2019ve owned dozens of rental properties over the years. At one point, I went to inspect a recently vacated property. The garbage was piled two to three feet high throughout the entire property, and I had to walk on top of it to get around and take photos.\u00a0<\/span><\/p>\n

All the curtains were closed, so it was dark <\/span>despite being<\/span> daytime. At one point in a dark room piled high with garbage like everywhere else, I stepped on something particularly squishy. I looked down to lock eyes with a homeless man who had broken in and passed out.\u00a0<\/span><\/p>\n

That\u2019s what it was like being a landlord.\u00a0<\/span><\/p>\n

And sure, that rental was in a lower-income neighborhood. But even the rentals I owned in middle- and upper-income neighborhoods caused me huge headaches, such as constant hassles with contractors, renters, and city inspectors. I hired property managers, but they were just as much work to manage. Like everyone else in the industry, they had an excuse every time they failed to do what they said they would do.\u00a0<\/span><\/p>\n

Labor Required<\/span><\/h2>\n

Active investing is, well, active. It\u2019s a business, whether a part-time side hustle or a full-time enterprise.\u00a0<\/span><\/p>\n

That labor is split into two broad categories: the labor and skill required to acquire new properties and that required to manage them once owned. Underestimating the labor is one of the many <\/span>mistakes made by novice cash flow investors<\/span><\/a>.\u00a0<\/span><\/p>\n

You can outsource some of that labor, but it takes huge bites out of your returns. For example, you can buy turnkey properties, but you won\u2019t get a discount. You\u2019ll pay full price and earn mediocre cash flow at best.\u00a0<\/span><\/p>\n

Scoring great deals on properties requires a marketing engine to find off-market properties. Read: work and skill.\u00a0<\/span><\/p>\n

So yeah, those professional landlords who own dozens or hundreds of properties? <\/span>They actually do make money\u2014but they\u2019re a small minority of landlords<\/span>, <\/span>running<\/span> a full-time business.<\/span> They buy off-market properties at deep discounts, finance them with a network of lenders they\u2019ve cultivated, renovate them with a team of contractors they\u2019ve trained, refinance them, and fill them with uncommonly professional property managers.\u00a0<\/span><\/p>\n

I know because my co-investing club invests alongside those operators as a <\/span>silent partner<\/span><\/a>.\u00a0<\/span><\/p>\n

How I Invest for Cash Flow Instead<\/span><\/h2>\n

In 2018, I unloaded all my rental properties. Today, I own a smaller interest in over 5,000 units (plus dozens of other real estate investments not measured in \u201cunits\u201d).\u00a0<\/span><\/p>\n

In some cases, that means equity ownership through joint venture partnerships. In others, it\u2019s equity ownership through syndications. For these equity investments, I enjoy the full tax benefits, cash flow, and appreciation that direct owners get.\u00a0<\/span><\/p>\n

I\u2019ve also lent <\/span>at<\/span> fixed-interest private notes <\/span>between<\/span> 10% <\/span>and<\/span> 15%, secured by real property <\/span>at<\/span> a low LTV.<\/span> These notes don\u2019t come with any tax benefits, but the high yield sure is nice.\u00a0<\/span><\/p>\n

If you\u2019re looking for passive income, check out these <\/span>seven income investments paying 8%+ yield<\/span><\/a> every year.\u00a0<\/span><\/p>\n

\u201cBut Brian, don\u2019t passive investments require $50,000 – $100,000 as a minimum investment, and aren\u2019t they higher risk?\u201d<\/span><\/em><\/p>\n

For a lower minimum investment, join a co-investing club. In mine, members meet online every month to vet a new investment and can invest $2,500 or more in the ones they like. That\u2019s a lot less than the $50,000+ you\u2019ll need for a down payment and closing costs for a rental property.\u00a0<\/span><\/p>\n

More Control Doesn\u2019t Mean Lower Risk<\/span><\/h2>\n

As for risk, too many investors confuse risk with control.\u00a0<\/span><\/p>\n

Most novice real estate investors think that because they \u201ccontrol\u201d a rental property, that reduces their risk. I can tell you firsthand: It doesn\u2019t.\u00a0<\/span><\/p>\n

I was 24 when I bought my first rental property and didn\u2019t know what I was doing. Sure, I technically had the final say over decisions like tenant applications and when to sell the property. <\/span>But I underestimated the labor and skill <\/span>involved<\/span>, made every mistake in the book, and lost massive <\/span>amounts<\/span> of money.<\/span>\u00a0<\/span><\/p>\n

Today, I invest small amounts ($2,500+) at a time with expert operators who are better at asset management and property management than I ever was. I don\u2019t have \u201ccontrol\u201d over decisions like which type of loan to use or which tenants to lease to, and good riddance. I\u2019ve outsourced that labor to professional operators.\u00a0<\/span><\/p>\n

Don\u2019t fall into the mental trap of thinking that control over the asset means control over the returns. They are not the same thing.\u00a0<\/span><\/p>\n

I\u2019ve built a \u201c<\/span>set it and forget it\u201d real estate portfolio<\/span><\/a>. Every quarter, my bank account floods with passive income. And someone else fields those phone calls about leaky roofs and delinquent tenants.\u00a0<\/span><\/p>\n

Not sure how to vet operators or find passive deals to invest in? Join a co-investing club for consistent deal flow and to vet operators together alongside 50 other investors while putting small amounts in the deals you like.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

According to the media and average Americans, landlords are all rich, lazy leeches growing fat off of honest workers.\u00a0 It\u2019s an easy narrative to spin. Too bad the numbers prove […]<\/p>\n","protected":false},"author":158586,"featured_media":181222,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4433],"tags":[],"class_list":["post-188760","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/188760","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/158586"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=188760"}],"version-history":[{"count":2,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/188760\/revisions"}],"predecessor-version":[{"id":188762,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/188760\/revisions\/188762"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/181222"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=188760"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=188760"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=188760"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}