Where are rental deals still cash-flowing after honest expenses? Thoughts after 70 days

[countTheGate]

After 70 days of watching and modelling Austin townhouses around $650,000, I still cannot make the numbers cash-flow. At 7.93% financing, they turn negative once I include vacancy, management, maintenance, insurance, property tax and tenant turnover.

Are buyers accepting weak current returns, contributing much more equity, or waiting for a better price or financing environment? I’m interested in realistic operating assumptions rather than headline gross yield—and especially which assumption tends to change the decision once a deal initially looks marginal.

 

[wide_yard]

More equity can hide the monthly deficit, but it does not improve the property’s operating performance; it only reduces financing expense. I would first calculate net operating income without the loan, then add several financing scenarios.

What rent, property-tax figure and HOA charge are you using? On a townhouse, an omitted or underestimated HOA cost could materially change an already thin result.

 

[xavi_flint]

I partly disagree that extra equity merely “hides” the issue. Positive cash flow may be the buyer’s priority, even if the return on that additional cash is modest. But it should be a deliberate trade-off, not a rescued spreadsheet.

I’d also stress-test turnover rather than using only a smooth annual vacancy percentage. One empty month plus preparation and leasing costs can look very different from vacancy spread neatly across twelve months.

 

[elio_meadow]

Clara, build a small sensitivity table with purchase price, rent, interest rate and equity as the variables. Keep recurring expenses separate from turnover and larger maintenance reserves. For insurance and property tax, use figures specific to each property rather than one portfolio-wide percentage.

Then set a minimum cash-flow or cash-return threshold before looking at more listings. If none of the Austin examples survives the base case without optimistic rent growth, waiting is a valid conclusion—not a failure to find the hidden assumption.