Most investors throw around "$100 per door" as the gold standard for good cash flow on a rental property, but this oversimplified rule can lead you to reject profitable deals or, worse, buy money-losing ones. The right cash flow target depends on your market, property type, investment strategy, and how you define "cash flow" in the first place.
This post covers what cash flow actually means, specific benchmarks for different property types and markets, and how to calculate whether a deal meets your criteria.
What Cash Flow Really Means (And What It Doesn't)
Cash flow is the money left over after you collect rent and pay all expenses, including your mortgage. Positive cash flow means you pocket money each month. Negative cash flow means you're feeding the property from your own bank account.
Here's the basic formula:
> Monthly Cash Flow = Gross Rent − All Operating Expenses − Debt Service
Operating expenses include property taxes, insurance, property management, maintenance, vacancy allowance, capital expenditure reserves, utilities (if owner-paid), and HOA fees. Debt service is your monthly mortgage payment (principal and interest).
Many new investors make a critical mistake: they calculate cash flow using only the mortgage payment and forget half the expenses. A property that "cash flows $400/month" on paper often breaks even or loses money once you account for real operating costs.
The $100 Per Door Rule: Where It Works and Where It Fails
The "$100 per door per month" benchmark became popular because it's simple. For a single-family rental, that's $100/month. For a fourplex, that's $400/month total.
This rule made sense when it was created. Properties were cheaper, interest rates hovered around 4%, and expenses hadn't inflated as dramatically. In 2025, with average 30-year mortgage rates between 6.5% and 7.5% and property prices up 30-40% from pre-pandemic levels, $100 per door is often the minimum viable threshold rather than a "good" return.
Where $100/door still works:
Where $100/door falls short:
The problem with a flat dollar amount is that it ignores your actual investment. Earning $100/month on a $20,000 down payment is a 6% cash-on-cash return. Earning $100/month on a $100,000 down payment is just 1.2%. That's worse than a savings account.
Better Metrics: Cash-on-Cash Return and Cap Rate
Instead of targeting a dollar amount, experienced investors focus on percentage returns.
Cash-on-Cash Return
Cash-on-cash return measures your annual cash flow divided by the total cash you invested.
> Cash-on-Cash Return = (Annual Cash Flow ÷ Total Cash Invested) × 100
Total cash invested includes your down payment, closing costs, and any immediate repairs or renovations.
| Cash-on-Cash Return | Rating | Context |
|---|---|---|
| Below 4% | Poor | Barely beats inflation; high risk for negative cash flow |
| 4-6% | Acceptable | Works if you're betting on appreciation or have other goals |
| 6-8% | Good | Solid return that provides meaningful income |
| 8-10% | Very Good | Strong deal in most markets |
| Above 10% | Excellent | Exceptional; verify your expense estimates |
In 2025, achieving 8%+ cash-on-cash returns requires either a below-market purchase price, value-add opportunity, or investing in secondary/tertiary markets.
Cap Rate
Capitalization rate measures the property's return independent of financing.
> Cap Rate = (Net Operating Income ÷ Property Value) × 100
Net Operating Income (NOI) is gross rent minus operating expenses, but *before* mortgage payments.
Cap rates tell you what the property would return if you paid all cash. They're useful for comparing properties and markets. A 6% cap rate means the property generates $6,000 annually for every $100,000 of value.
| Market Type | Typical Cap Rate Range (2025) |
|---|---|
| Gateway cities (NYC, LA, SF) | 3.5-5% |
| Major metros (Denver, Austin, Nashville) | 4.5-6% |
| Secondary markets (Indianapolis, Kansas City) | 5.5-7.5% |
| Tertiary markets (smaller cities, rural) | 7-10%+ |
Higher cap rates usually mean higher risk (worse tenant quality, less appreciation potential, harder to sell). Lower cap rates typically indicate stable, appreciating markets with quality tenants.
Realistic Cash Flow Targets by Property Type
Different property types warrant different expectations.
Single-Family Rentals
For a single-family rental purchased in 2025 with 20-25% down at current interest rates, target:
The single-family market is competitive because owner-occupants bid against investors. Finding good rental property cash flow often requires off-market deals, foreclosures, or estate sales.
Small Multifamily (2-4 Units)
Duplexes, triplexes, and fourplexes offer better cash flow potential because you spread fixed costs across multiple units.
Small multifamily properties often provide the best monthly cash flow opportunities for investors who can handle more complexity than single-family but want to stay under the commercial lending threshold.
Large Multifamily (5+ Units)
Commercial properties are valued differently (based on NOI, not comparable sales), and financing terms vary.
Larger properties offer economies of scale, but they require more capital and expertise.
A Practical Example: Calculating Cash Flow on a Duplex
Let's walk through a real calculation for a duplex in Indianapolis (a popular investor market).
Purchase Details:
Income:
Monthly Expenses:
| Expense | Amount | Notes |
|---|---|---|
| Mortgage (P&I) | $1,413 | 7% rate, 30-year, $213,750 loan |
| Property Taxes | $238 | $2,850/year |
| Insurance | $175 | Landlord policy |
| Property Management | $188 | 8% of gross rent |
| Maintenance Reserve | $235 | 10% of gross rent |
| Vacancy Reserve | $118 | 5% of gross rent |
| CapEx Reserve | $118 | 5% of gross rent |
| **Total Expenses** | **$2,485** |
Cash Flow Calculation:
This property is cash flow negative at the listed price with current financing. Many investors would walk away here.
But what if you negotiate?
Scenario 2: Purchase at $260,000
Scenario 3: Purchase at $260,000 + Raise Rents to Market ($1,300 and $1,250)
This example shows why purchase price matters more than almost any other variable. A 9% reduction in price turned a money-loser into a reasonable deal. Pushing rents to market made it a solid investment.
How Market Conditions Affect Good Cash Flow Targets
The 2025 market presents specific challenges and opportunities.
Interest Rate Impact
Every 1% increase in mortgage rates reduces cash flow by roughly $60-70 per $100,000 borrowed. If you locked in a 3.5% rate in 2021, you have a massive cash flow advantage over someone buying the same property today at 7%.
This doesn't mean you shouldn't buy in 2025. It means you need to be more selective and negotiate harder. Properties that were break-even at 3.5% rates might need a 10-15% price reduction to work at 7% rates.
Rent Growth Expectations
Rents grew 15-25% in many markets from 2020-2022, then flattened. In 2025, expect 2-4% annual rent growth in most markets, which is closer to historical norms.
Don't buy a property that only works if rents rise 5%+ annually. Build your projections using current market rents or slightly below.
Insurance and Tax Increases
Property insurance costs have risen dramatically in many states, particularly Florida, Texas, Louisiana, and California. Property taxes often spike after a sale when the property is reassessed.
Always get actual insurance quotes and verify what post-sale taxes will be before calculating cash flow.
Common Cash Flow Calculation Mistakes
These errors can turn a projected $300/month cash flow into actual $0 or negative returns.
Underestimating vacancy: Using 0% or 3% vacancy in your calculations is wishful thinking. Even in hot rental markets, use 5% minimum. In average markets, use 8%. This accounts for turnover time between tenants, not just actual vacancies.
Ignoring capital expenditures: Roofs, HVAC systems, water heaters, and appliances all fail eventually. A $10,000 roof replacement on a property that cash flows $200/month wipes out over 4 years of profit. Budget 5-10% of rent for CapEx reserves.
Using seller-provided expenses: The seller's insurance, tax, and utility figures might be outdated, understated, or based on owner-occupant rates. Verify everything with your own quotes and research.
Forgetting property management: Even if you self-manage, include property management fees (8-10% of rent) in your calculations. Your time has value, and you might want to hire a manager later. A deal that only works with free labor isn't a good deal.
Mixing up NOI and cash flow: Net Operating Income excludes mortgage payments. Cash flow includes them. A property can have strong NOI and negative cash flow if you over-leverage.
Setting Your Personal Cash Flow Targets
Your target should reflect your investment goals, not just a generic rule.
If you need income now: Target 8%+ cash-on-cash return and prioritize monthly cash flow over appreciation. Look at Midwest and Southern markets with higher cap rates.
If you're building long-term wealth: A 4-6% cash-on-cash return might be acceptable in appreciating markets. You're trading current income for future equity growth.
If you're house hacking: Living in one unit while renting others changes the math entirely. Even breaking even is a win because you're eliminating your housing expense while building equity.
If you have a low-rate loan locked in: Congratulations. You can afford to target cash flow amounts rather than percentages because your cost basis is so favorable.
The Bottom Line
A good cash flow for a rental property in 2025 means different things in different contexts. The old "$100 per door" rule is a starting point, not a standard.
For most investors buying with current financing, target 6-8% cash-on-cash return as a minimum threshold for a "good" deal. Properties hitting 8-10%+ cash-on-cash are excellent. Anything below 5% better come with strong appreciation potential or a clear value-add strategy.
The most important thing is running accurate numbers with realistic expenses. Optimistic projections create real losses.
Run your own numbers with our [Single Family Calculator](/tools/single-family) or [Multifamily Calculator](/tools/multifamily) to see exactly what cash flow you can expect from a specific deal. Input the actual purchase price, real expenses, and current interest rates. The calculator handles the math so you can focus on finding properties that meet your criteria.
Try It Yourself
Ready to analyze your next deal? Our Single Family Calculator does all the math for you.
Try Single Family Calculator