Buy to rent?

"It pays for itself."

You hear it a lot.

Sometimes it's true.

Many times, it's not.

Because buying to rent is a business — not automatic income. And every business has costs that don't show in the photo.

The easy math: monthly rent times twelve, divided by the price. It gives you a percentage that looks good.

It looks like this: you buy at $250,000, it rents for $1,800. On paper, a great return.

But then the subtraction shows up: HOA, repairs, taxes, a month empty, some fix you didn't expect.

And the number that looked excellent already looks different. Not because the business is bad — because the real return is rarely the gross one.

Of that subtraction, the two most underestimated:

— Vacancy: the months with no tenant. The one that hurts most and gets calculated least. One empty month eats a good part of the year.
— Opportunity cost: what else that money could be doing if it weren't parked there.

Earning well and rising in price aren't the same thing.

Sometimes they even pull against each other.

What rents best isn't always what appreciates most.

The math that shows you only the gross is done by whoever's selling — not by whoever's going to live with the result.

This isn't "don't buy to rent." It can be excellent — with the net number in hand, a realistic vacancy for that kind of property and that area, and the full costs in. The problem isn't the business. It's going in with napkin math.

Before buying to rent, I'd run the return with a realistic vacancy for that property and area, all costs in, and ask one thing: does it still make sense?

The rent looks pretty in gross.

The real return shows up after the subtraction.