Buying Your First Rental House: Do the Numbers Work?
A rental house only works if the rent covers the real monthly cost — not just the mortgage. If the rent does not cover the mortgage payment, property tax, insurance, and repairs, the house will cost you money every month, no matter how good the purchase price looks.
Before you buy, add up the full monthly cost:
- Mortgage: the monthly loan payment, including interest. This is usually the largest cost, but it is never the only one.
- Property tax and insurance: both are paid every month, often as part of the loan payment. Ask for the actual amounts for the house you are considering, not an estimate.
- Repairs and upkeep: roofs, furnaces, plumbing, and appliances all need work over time. Set money aside each month, even in months when nothing breaks.
- Empty months and other costs: allow for months with no tenant, and for costs such as management, utilities you pay, or association fees, if any apply.
Then compare that total with realistic rent. Look at what similar homes nearby actually rent for today — not the highest rent you hope to get. If realistic rent barely equals the cost, one repair or one empty month puts you behind.
Practical takeaway
Before you make an offer, write two numbers side by side: the full monthly cost, and the realistic monthly rent. Buy only if the rent covers the cost with a cushion left over.
Thinking about your first rental house?
Contact us or book a call — we will help you run the numbers on a house before you buy.
