Is cash flow on LTRs dead in 2026?
Anastasia WaliaPro Member
Investor · Evans, San Francisco · Member since 2025 · 10 posts · 29 votesIs cash flow on LTRs dead in 2026?
Most Popular Reply
Lender · Boca Raton · Member since 2026 · 5 posts · 4 votes
2moThe 1% rule is a an outdated rule of thumb to underwrite a deal in seconds. In todays market, most of the time, it just does not pencil in many markets.
Min monthly cash flow would differ per investor and whatever their goals are. An underperforming property can be added to a portfolio solely based on appreciation potential and location if other assets can offset the lack of cashflow.
Deals are still out there. Many investors have to be flexible.
21 Replies
- Lender · Boca Raton · Member since 2026 · 5 posts · 4 votes2mo
The 1% rule is a an outdated rule of thumb to underwrite a deal in seconds. In todays market, most of the time, it just does not pencil in many markets.
Min monthly cash flow would differ per investor and whatever their goals are. An underperforming property can be added to a portfolio solely based on appreciation potential and location if other assets can offset the lack of cashflow.
Deals are still out there. Many investors have to be flexible.
- Investor · Evans, San Francisco · Member since 2025 · 10 posts · 29 votes2mo
Quote from @Esteban Arrapalo:
The 1% rule is a an outdated rule of thumb to underwrite a deal in seconds. In todays market, most of the time, it just does not pencil in many markets.
Min monthly cash flow would differ per investor and whatever their goals are. An underperforming property can be added to a portfolio solely based on appreciation potential and location if other assets can offset the lack of cashflow.
Deals are still out there. Many investors have to be flexible.
My SF property was based on location and appreciation, it now cashflows just over $200 month as a LTR, more if I do mid-term but it's a lot of work.
When you say many investors have to be flexible, in what terms? - Lender · Boca Raton · Member since 2026 · 5 posts · 4 votes2mo
Quote from @Anastasia Walia:
Quote from @Esteban Arrapalo:
The 1% rule is a an outdated rule of thumb to underwrite a deal in seconds. In todays market, most of the time, it just does not pencil in many markets.
Min monthly cash flow would differ per investor and whatever their goals are. An underperforming property can be added to a portfolio solely based on appreciation potential and location if other assets can offset the lack of cashflow.
Deals are still out there. Many investors have to be flexible.
My SF property was based on location and appreciation, it now cashflows just over $200 month as a LTR, more if I do mid-term but it's a lot of work.
When you say many investors have to be flexible, in what terms?SF is a tough market to cash flow so congrats on getting the $200+/month.
Flexible in the sense of looking for opportunities out of state or adjust the buy-box, sometimes that is not as easy as it sounds.
- 2moArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 961 votes
Quote from @Anastasia Walia:
I keep hearing about a 1% rule that is impossible to hit in most markets. My simple understanding (also new here) is that $300,000 would need to rent for $3,000 a month, and even that doesn’t guarantee a profit after the mortgage, taxes, insurance, vacancy, maintenance, etc.
So... If I'm only cash flowing $50-$100 a month, it could take years to recover my closing costs and 1 repair could wipe out my profits.
For people still buying long term rentals:
1. What is the min monthly cash flow that makes the deal worth it for you?
2. Is the 1% rule useful or just a quick filter?
3. Are most people banking on appreciation and principle pay down at this point?
Also curious,Where are the best deals right now if they are not with long term rentals?
I don't think LTR cash flow is dead, but the 1% rule is better used as a quick screening tool than a hard rule. I'd rather see a deal that still cash flows after realistic vacancy, maintenance, CapEx, management, taxes, and insurance than chase a headline rent-to-price ratio. If you're in a high-cost market like San Francisco, I'd definitely look at out-of-state options, especially Midwest markets, where lower acquisition prices can make the numbers work better. For me, the deal has to have enough margin that one bad repair doesn't wipe out an entire year of cash flow.
- Investor · Evans, San Francisco · Member since 2025 · 10 posts · 29 votes2mo
Quote from @Arman Ahmed:
Quote from @Anastasia Walia:
I keep hearing about a 1% rule that is impossible to hit in most markets. My simple understanding (also new here) is that $300,000 would need to rent for $3,000 a month, and even that doesn’t guarantee a profit after the mortgage, taxes, insurance, vacancy, maintenance, etc.
So... If I'm only cash flowing $50-$100 a month, it could take years to recover my closing costs and 1 repair could wipe out my profits.
For people still buying long term rentals:
1. What is the min monthly cash flow that makes the deal worth it for you?
2. Is the 1% rule useful or just a quick filter?
3. Are most people banking on appreciation and principle pay down at this point?
Also curious,Where are the best deals right now if they are not with long term rentals?
I don't think LTR cash flow is dead, but the 1% rule is better used as a quick screening tool than a hard rule. I'd rather see a deal that still cash flows after realistic vacancy, maintenance, CapEx, management, taxes, and insurance than chase a headline rent-to-price ratio. If you're in a high-cost market like San Francisco, I'd definitely look at out-of-state options, especially Midwest markets, where lower acquisition prices can make the numbers work better. For me, the deal has to have enough margin that one bad repair doesn't wipe out an entire year of cash flow.
What are your top 3 cities, right now, in the midwest?
- Rental Property Investor · Palo Alto, CA · Member since 2026 · 42 posts · 22 votes2mo
Hey Anastasia,
No I don't think cash flow on LTRs are dead in 2026 or in the future. Sure, it has gotten harder since the 2010s when interest rates being the highest driver for the pain when it comes to maximizing the return were lower but it all comes down to the numbers - micro and macro wise. I always stress model as much as I can in order to see the true floor base after accounting for an emergency expense, Capex reserves, and other things. So to be honest, cash flow is entirely possible but nowadays with how the market has been, risk modeling, underwriting fast, and other things is extremely important. I do have rules of thumb when running analysis on a property like insurance and maintenance but in general I try not to use too many rule of thumbs especially for the second question you asked about the 1% rule being used since it rarely reflects the reality. In regards to the other questions you asked, here's my honest take.
1. I don't have a set minimum monthly cash flow that makes the deal worth it to me. If I can push up from already assumed numbers like the vacancy and interest rate, then I challenge the capex reserves, an emergency fund, and a year turnover cost.
2. Like I said, the 1% is tough to apply and doesn't reflect reality anymore given the changes in the market.
3. I do think many people look to appreciation and just want to make sure that the rent covers the monthly debt.
In regards to the 'best deals' you are asking, there really isn't a perfect answer to that as every type of strategy or deal comes with trade-offs. I personally like LTR because it is fairly beginner friendly compared to others but for seasoned investors, from what I hear and see, they tend to go into CRE, Multifamily Investing, BRRRR, Flipping, and those high stakes deals when done right of course.
Given what you mentioned about your SF property cash flowing around $200/month, I'd actually be curious to see how that holds up under different vacancy, repair, CapEx, and expense scenarios. That's usually where I think the real question is with thin-cash-flow properties—not just whether they're technically cash-flowing, but how resilient the deal is when assumptions change. Would be happy to connect and share how I break that down.
Quote from @Anastasia Walia:
I keep hearing about a 1% rule that is impossible to hit in most markets. My simple understanding (also new here) is that $300,000 would need to rent for $3,000 a month, and even that doesn’t guarantee a profit after the mortgage, taxes, insurance, vacancy, maintenance, etc.
So... If I'm only cash flowing $50-$100 a month, it could take years to recover my closing costs and 1 repair could wipe out my profits.
For people still buying long term rentals:
1. What is the min monthly cash flow that makes the deal worth it for you?
2. Is the 1% rule useful or just a quick filter?
3. Are most people banking on appreciation and principle pay down at this point?
Also curious,Where are the best deals right now if they are not with long term rentals?
>What is the min monthly cash flow that makes the deal worth it for you?
I do not care what the cash flow is. I care what the total return is. My goal is to receive very my investment in less than 4 years. This is virtually impossible with an emphasis on cash flow. Any worse return then you need to recognize return from other options.
>Is the 1% rule useful or just a quick filter?
See answer to #1 but I also claim 1% rule is negative cash flow at market financing. Start with the recognition that the 50% rule is aggressive in markets that can obtain the 1% rule. So 50% rule on 1% rule isa near unicorn. At 6.75, 80% LTV, 30 your P&i is 52%.
So 50% (50% rule: vacancy and sustained expenses is 50% of rent) + 52% (P&i) = 102% or negative 2% of rent negative per month.
>Are most people banking on appreciation and principle pay down at this point?
I hope not. Rents and appreciation have been flattish nationally and in my primary market over the last couple of years. If you purchased relying on appreciation or rent growth then your investment has likely struggled over the last couple years. Since 2022 I have been doing my underwriting at 0% rent growth and appreciation for 5 years. I was a year early on rent and 2 years early on appreciation but I would rather have conservative underwriting than aggressive underwriting.
Best deals depends on your definition of best deals. I like far below value purchases especially sophisticated purchases. I like value adds, especially sophisticated value adds. I like high end properties in special areas that may not have been fully recognized as special. I like moves that leverage the aging population.
I also recognize that RE is more challenging than the recent past and that RE may not always be the best investment option available.
Good luck
- online · Member since 2026 · 99 posts · 45 votes2mo
One thing that doesn't get talked about enough in these cash flow conversations: most people budget maintenance as a flat percentage of rent (the classic "1% rule for repairs" version), and that number is basically a guess. It doesn't account for what's actually sitting in the property.
A 15 year old water heater and a 2 year old roof carry very different risk, but a flat percentage treats them the same. When you actually map out the age and expected lifespan of each major system (roof, HVAC, water heater, appliances) and budget against that, the "healthy" cash flow number often looks different than what a generic rule spits out. Sometimes better, sometimes worse, but at least it's grounded in the real condition of the asset instead of a rule of thumb.
To your question directly: I don't think there's a universal min monthly cash flow that works, it really depends on how much of a buffer you've built for the stuff that isn't a mortgage payment. The 1% rule is a fast filter for deal flow, not something to underwrite on.
- 2moAndrew SeverinoBusiness MemberBroker / Owner / Real Estate Investor · Fairhope, AL · Member since 2017 · 36 posts · 14 votes
Th 1% rule is awesome and I used it very successfully.....years ago. It still can work as a screening tool but with higher interest rates where prices have not fallen, it does not guarantee cash flow. And it has never worked in higher priced markets ( not since I started in 1996) like the bay area and other metro areas like NYC.
1. Monthly cash flow is tough with single family homes, like @Arman Ahmed said midwest markets are a good place to look. Also if you purchase a home in very good condition, and you get the seller to buy you a home warranty, then vacancy is your only real concern. I personally don't use them on multifamily but I had a client years ago with a full time job and she bought one with her first rental and she used it all the time for repairs, I think her co pay was only $50 per repair. Single family home sellers are accustomed to buyers asking for home warranties as part of the sale and your re agent can write it into a purchase agreement.
2. The 1% rule will become more useful again if either rates come down or prices do, and it still is very useful when assessing properties with more units.
3. Appreciation and principle pay down are real returns that are fundamental factors motivating buy and hold strategy. My experience over the years has been is that any new investment that is not a value add should show increased rents, appreciation of some sort and principle reduction over a 3-5 year period. Of course value add happens much faster, but with additional work and capital. Sometimes when you are starting out wiht smaller properties you need to get through that initial period to see breathing room . If you crunch your numbers before buying so that you avoid a negative cash flow situation combined with some patience and discipline things will work out. coming here with questions is the right thing to do, when I think back to when I got started at 22 years old, with ni bigger pockets, no internet really, I;m not sure you tube was around yet I Was asking advice fomr everyone I could. I was so on the fence with my first property I bought from my landlord I was askgin advice frim my father, my girlfirend's father, a real estate agent I ended up using ( I cold called him, at the time I didn't realize I probably made his day - already had the property and the price, just needed a contract!) and because I liked the closing the attorney so much, I bended his ears for free advice for the next 30 years.
Honestly, I think the 1% rule has officially retired and is now enjoying a quiet life somewhere warm. 😂
The reality is that $100/month in cash flow, especially before depreciation, is probably not enough to justify the risk, time, and occasional “surprise” expenses that come with owning rentals.
In my experience, you often need to put more money down to make the numbers work. I typically look at multifamily or mixed-use properties, and if I’m not clearing around $400 per door, it’s usually not worth my time.
The other big piece is having a healthy cash reserve. This year alone, I’ve dealt with a roof replacement, siding replacement, a mainline issue, and three turnovers. Apparently, some of my buildings didn’t get the memo that I was trying to have a relaxing year. 😂. There's always something...
I also wouldn’t bank on appreciation. It’s never guaranteed. I’d much rather make my money on the buy than hope the market makes the deal work later.
My rule of thumb: if you’re buying a $300K property and don’t have at least 10% of the purchase price available in savings or readily accessible reserves, I’d seriously reconsider. Cash is better than relying on credit, and you’ll sleep a lot better at night.
And one more piece of advice from 24 years of experience: don’t use your primary residence as the piggy bank for your investment properties.
Good deals should create wealth; not constant anxiety. 😉
- Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes2mo
Real life cashflow is dead unless have capital to buy a million dollar 3 or 4 unit with some scale in certain markets, those are 99% of what I have sold over the last year and still work well class A B 700 credit tenants so very low operating costs, under 3% vacancy, annual rent increases and rents get close to 1% after do some cosmetics if push to top of market rate. Any single family house cheap enough will have drastically higher expenses then the excel sheet shows, maybe can cashflow those houses sec 8 if slumlord them but its a headache. Any cheap multi units have appreciated and are no longer that cheap or are in areas with way higher turnover expenses then you realize aka cleveland etc like many realtors push on here haha. I recently sold a 4 unit of my own in rockford IL midwest cashflow area $315k it was rented $4000 and still a complete loser with that low grade of tenants that have high turnover and running costs. People think midwest is cheap but really this place sold $135k 3 years ago and sold $68k 7 years ago. The new investors do not realize what cheap actually means in midwest historically.
- 2moSeth McGatheyBusiness MemberReal Estate Agent · Milwaukee WI · Member since 2024 · 321 posts · 255 votes
Personally the 1% rule just allows me a metric to immediately know if a deal is worth considering. If I see one property for $300,000 with $2,500 rent and another is $250,000 with $1,500 rent, neither hits the 1% rule. But I can very quickly estimate that the $300,000 property is likely more worth analyzing deeper. It doesn't tell me if either is a good deal, but it gives me the green light to dig deeper or the red light not to bother.
1. My personal minimum is $200 cashflow, but I prefer $500.
2. As stated above, the 1% rule is mainly a rule of thumb to help you decide if something is worth considering, not a strict rule.
3. I always say that the only people who focus on cashflow are people at the start and end of their investing careers. When people first start, they focus on cashflow because they think buying for cashflow is the fastest way to retire. It seems to make sense. I need X amount of money each month to live off of, if I buy properties that produce X amount a month, I can retire. The issue is, it takes a lot of properties and equity to get a lot of cashflow. And the slowest way to get cash flowing property and use the cashflow to pay for the next one. People at the end of their career return to wanting cashflow, because they have successfully built up their portfolio and want to reap the benefits. However, the magic part of investing is the middle part. You buy a property, and as it appreciates, and you get the tax benefits you make significantly more from that, than from cashflow. Cashflow is really your buffer between your expenses and your personal income. If your capex and other savings do not cover your expenses, your cashflow comes in to save the day and protect you from no longer being able to afford the property. But the appreciation and tax benefits is what you will likely use to buy future properties.
And I still like LTRs. However they are not the fastest growth, just the safest. STRs, rent by the room, and some other more aggressive strategies will often get you a better cash on cash return. But I am okay going the slightly slower and safer route of mainly LTRs.
Seth McGathey - Shorewest Realtor4.912 Reviews - Investor · Minnesota/Wisconsin/Iowa · Member since 2019 · 49 posts · 77 votes2moMy cashflow goal when purchasing is a good Cash On Cash return (CoC) for the down payment
- Hey Anastasia, Id say that with the current rates you need a bit more to cashflow on 25% down, maybe around 1.3%, so for quick math you can probably use 1.5%. If the rates go back down, the 1% role would likely become more predictive of cashflow again. It would also differ a lot based on the market, fixed expenses associated with the property (taxes, insurance), and largely on one’s definition of cashflow. If you define cashflow simply as gross rents minus PITI, then 1% probably still works. But if you include capex, maintenance, management, utilities, and vacancy, then it quickly becomes apparent that you need more than 1% with the current rates dictating higher P&I.
- Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes2mo
It's too broad based and various sceneries can be considered. Many here are afraid of or they shy away for class C/D properties. You can get close to that rule here, but you must know what you are doing, which I do. I recently walked into a duplex with nearly nothing down that cashflows over 500 a month. In other cases, depending on when and where I can take lower cashflow, add value and deploy other strategies with an appreciation mix added. There are multiple things to consider but without question, it's not dead. Maybe dead for class A stuff when people have no idea how to add value or deploy strategies, but again, it can be achieved. Stuff is clearly tighter though.
- 2moJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votesGreat question, Anastasia! I look at the 1% rule as a quick filter, not a rule that automatically makes something a good deal. Personally, $50-$100/month would be too thin for me because one HVAC repair, turnover, or unexpected expense could wipe out a year of cash flow pretty quickly. I’d rather have a few hundred dollars of monthly cash flow after realistically accounting for vacancy, maintenance, CapEx, management, taxes, and insurance. Appreciation and principal paydown are great bonuses, but I wouldn’t want the deal to depend on appreciation just to make sense. There are still markets where you can get close to or even hit the 1% rule. Here in Columbus, for example, I still see properties in the $120K-$180K range where the rent can support those numbers, depending heavily on the neighborhood and condition. I’ve seen a $120K property rent around $1,550/month, so those deals aren’t completely gone, they’re just harder to find. Happy to connect and answer any questions you have!
Quote from @Anastasia Walia:
I keep hearing about a 1% rule that is impossible to hit in most markets. My simple understanding (also new here) is that $300,000 would need to rent for $3,000 a month, and even that doesn’t guarantee a profit after the mortgage, taxes, insurance, vacancy, maintenance, etc.
So... If I'm only cash flowing $50-$100 a month, it could take years to recover my closing costs and 1 repair could wipe out my profits.
For people still buying long term rentals:
1. What is the min monthly cash flow that makes the deal worth it for you?
2. Is the 1% rule useful or just a quick filter?
3. Are most people banking on appreciation and principle pay down at this point?
Also curious,Where are the best deals right now if they are not with long term rentals?
Jimmy Lieu, Red 1 Realty4.9121 Reviews My answer would be depending which market.
a cash flow market, where there's more turnover (class c generally) I would require more cash flow, but on the other hand, I did Deals in the past specifically one deal that I am negative a few hundred dollars in cash flow still it's a crazy appreciating market and I was absolutely more than happy with the results...bought July 2024 single family in Jersey for 505K it just got appraised two weeks ago for $600,000 I want you to tell me which deal would be better...
- Lender · Metro Detroit · Member since 2024 · 24 posts · 7 votes2mo
Hi Anastasia,
I think the 1% rule is best used as a quick screening tool, not a hard rule.
It’s getting harder to find those deals that feel like a “steal,” and cash flow today isn’t always what it used to be. That doesn’t mean the property isn’t cash flowing just because it doesn’t hit the 1% rule.
For me, the bigger question is the overall return and risk. A property cash flowing $50–$100/month might not be very attractive if one repair wipes out a year of cash flow. But if you’re buying at the right price, have strong rents, good reserves, and there’s room for appreciation or rent growth, the deal can still make sense.
I’d rather see positive cash flow after ALL expenses than pass on a solid deal simply because it doesn’t meet an arbitrary 1% rule.
I also think a lot of long-term investors today are looking at the whole picture — cash flow + principal paydown + appreciation + rent growth — rather than expecting cash flow alone to make the investment worthwhile.
- Austin, Travis County · Member since 2026 · 13 posts · 3 votes2mo
I think the more useful question than “what minimum cash flow works?” is how fragile that cash flow is. Two properties can both show +$150/month, but one might survive slightly lower rent, higher insurance and a repair while the other immediately goes negative. I’d personally want to see the downside case alongside the base case before deciding. Are you evaluating a specific property right now or mostly trying to establish your buy box?
- Coral Springs, FL · Member since 2018 · 495 posts · 114 votes1mo
The cash flow problem on LTRs usually isn't the market — it's the acquisition price. When you're buying at retail through the MLS, you're paying full price and hoping rents cover your debt service at today's rates.
One approach that's working in Broward County is buying through tax deed auctions instead. You're acquiring properties at 60-70% of assessed value because most bidders don't do the rehab analysis. A property assessed at $400K might sell for $240-280K at auction. That's $120-160K in instant equity at purchase.
Do the math on cash flow:
- Traditional MLS purchase at $400K with 25% down ($100K) → $300K loan at 7% = $1,996/mo P&I + $400 taxes + $150 insurance = $2,546/mo. Rent at $2,800/mo = $254/mo cash flow before maintenance/vacancy.
- Tax deed purchase at $260K with 25% down ($65K) → $195K loan at 7% = $1,297/mo P&I + $400 taxes + $150 insurance = $1,847/mo. Rent at $2,800/mo = $953/mo cash flow before maintenance/vacancy.
Same property, same rent. The difference is acquisition cost. You're creating forced appreciation at purchase by buying at a deep discount.
Broward County has Tax Deed Auction #113 on October 26, 2026 with 16 properties. I've been analyzing the inventory — mix of single-family and condos, several with significant equity spreads. Happy to share the deal packets with anyone who wants to see the numbers.
@Nicholas Alexander Guerrero your point about cash flow fragility is exactly right. The margin of safety comes from buying at a discount, not from hoping rents go up or rates go down.
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