How much should a rental property cash flow?

A common target is $100 to $200 a month per unit after all expenses, reserves and the mortgage, or a cash-on-cash return of 8% or better on the cash invested. Anything positive after honest reserves is workable. Negative cash flow means you pay to own it.

Dollar targets ignore how much cash is in the deal. $200 a month is $2,400 a year, a 16% return on $15,000 invested and 3% on $75,000. The percentage is the better test.

Whatever the target, compute it after vacancy of 5 to 8%, maintenance and capital reserves of 10% of rent, and management of 8 to 10% even if you self-manage. A property that cash flows $300 a month before those and $50 after them is a $50 property. At current rates many properties bought with 25% down cash flow little or nothing, which is why the rent-to-price ratio matters.