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I've researched this several time of late in my area, for a city dwelling... Based on $x per sqfot rental rates, I can't see getting more than 3% profit. Dunno about vacation rentals, that's another story. By the time you pay the insurance, property tax, repairs, let alone a management company if you don't want to be bothered, there really is not much left.
I will do it shortly anyway, because it's possible long term to make some $$ on the property itself.
Example in my area: I was looking at a $140K small home, rentable for $900 max per month.
That's 10800 a year IF they pay. Figure $1000 of repairs and piddly crap. $1000 insurance (flood, hurricane, fire) and that is conservative here. Prop tax is $3K. You got $5800 rental money, If there is no mgt company... I suppose you pay tax on that... imagine you get a bad tenant now and then and get stiffed a few months rent, even one time a year.... and compare the result with safer investments... nothing to write home about... Of course that's my area, your costs my vary and influence bottom line. I think the key is to work up to multiple units and be a ruthless landlord and know the law really well regarding evictions and your rights... I can't be bothered. I'm gonna be doing it simply in the hope the property will go up eventually, it's a lot I could build on for myself.
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