If you can find one, you often find that they'd rather let the property sit empty than renting it.
Or just look at the cost of buying a house vs renting a similar house, account for maintenance, and see if the numbers line up.
Anecdotally, I know people who buy single family homes and rent them for profit. My 3 bed, 2 bath single-family home has a $3,000/monthly mortgage, I could easily rent it for more than $3,500 (closer to $4,000). Take out 10% for maintenance fees, and I net $200 a month.
In other words, you could not make a profit.
You need to consider all costs, not just mortgage. Taxes, insurance, maintenance, repairs, downtime (when it sits empty between renters).
If your mortgage is $3000 and you can only rent it for less than $4000, you can't make a profit.
I go through this math often while daydreaming of renting my house and retiring somewhere cheaper. There isn't any scenario I can come up with where it would actually be profitable.
Even if you only count the downpayment, $2400 a year on $90k is a 2.6% return; you therefore are getting the majority of your return from appreciation.
To actually make a profit on the rental portion, you need to discount the appreciation. You can do this if you're paying into a mortgage from 20 years ago and renting at todays prices, but that's just ignoring the fact that you could sell the property.
The biggest risk that most small landlords don't account for is a bad tenant - they exist and they will quickly eat through your $200/net a month.
The final proof is no company anywhere is building single-family rentals. If there was money to be made there, they would; but you need to get to apartments and the cost-savings inherent in them before it makes sense.
And yes, I’ll agree that some portion of the ROI on a house is the expected appreciation, but we’ve setup a system where that’s effectively guaranteed in many locations and simultaneously unavailable to renters. There’s a reason “be a landlord” is now the go-to “get rich” strategy for a large number of people.
I've been a landlord of a non-mortgaged property and am about to become one again (reluctantly). We charge a below market rental rate, and typically make around 4-6% (pretax) of the nominal property value a year (we typically divert 1-2% of the rent into a maintainance fund).
I would also getting the increased equity in the house as each mortgage payment lowers the total loan amount.
If you pocket 500 per month, you are looking at around 35 years to break even on a $200k down payment.
You will never break even when take into account opportunity cost compared to a low appreciation bond or stock.
Not sure your definition of break even. After 30 years, I will have paid off the entire house.
The reason why liquidity preference exists is that land can be used for almost anything, is limited in supply and going up in value, making an early commitment can lose you a lot of potential profit. For example, a 10 year lease to a farmer could turn out to be a bad decision if 3 years into the lease, a power utility offers to build wind turbines on the land and you are still stuck with 7 years on that lease. The power company moves on and you lost your opportunity.
It turns out, a land value tax neutralizes liquidity preference.