Hi Bigger Pockets - long time lurker.
Part of my procrastination in buying SFR rentals in 2016 has been that my calculations show negative returns, thus no cash flow. The DFW market heated up rapidly in 2013-2016 and has cooled slightly over winter. However, housing is still very expensive and rental value has not kept up. Whether sales have peeked or not is another debate.

How do landlords manage to buy and hold rentals if the rental returns are sub the 1% rule? Some area's the rental income is as low as 0.6% - 0.8% of value and if you do the due diligence there is not enough in the rent to set aside for keeping you at the recommended minimum 50% expenditures.
E.g.
Vacancy (8.133%pa)
Insurance (1% of value pa)
Maintenance (10% of rent)
Taxes (2.48% of purchase value pa)
Management (??? 10% of rent)

Granted some expenditure above is subjective, but you still need to set it aside and this excludes servicing your mortgage. Unless you have a lot of equity in the property the numbers do not stack up. Property is sold the day it hits the marketplace and I am yet to find discounted property for sale to satisfy the 1% rule.
So how do seasoned investors make money in this sort of rental market?

Thanks in advance,

Gary.