Short answer: No more than the price at which it breaks even, and ideally less so you keep a cushion. At 7.40% with 20% down and typical expenses, a home renting for $1,677 a month breaks even at about $203,000, roughly 121 times the monthly rent at the US property tax rate.
Definition
Break-even purchase price is the highest price at which a rental's monthly cash flow is exactly $0 for a given rent, loan and set of expenses. Paying more means the property loses money each month; most investors offer below it to keep a cushion.
By the numbers: At 7.40% with 20% down (Freddie Mac, October 15, 2026), a home renting for the US median 3-bedroom gross rent of $1,677/mo breaks even at about $203,000, about 56% of the US median home value of $360,600 (Census ACS 2024). Only 2 of 49 big rental markets have a break-even price above their median value.
The short answer
Start with the rent, not the list price. At today's 30-year rate of 7.40% (Freddie Mac, October 15, 2026), with 20% down and normal expenses, a home renting for the US median 3-bedroom gross rent of $1,677 a month breaks even at a price of about $203,000. That is roughly 121 times the monthly rent.
The US median home value is $360,600 (Census ACS 2024), so the typical home would need to sell for about 56% of its value to cash-flow at $0. Bought at the median price instead, the same rental loses about $990 a month, and you would need about 60% down to bring it back to $0.
Good to know: Break-even is the most you should pay, not a good price. At that price you earn nothing each month and rely on appreciation and loan paydown. Most investors want a cushion of positive cash flow on top.
The max-price formula
Cash flow is rent minus operating costs minus the mortgage. Set it to $0 and solve for the price:
Max price = (rent × (1 − vacancy − maintenance − management) − insurance − HOA) ÷ (tax rate ÷ 12 + loan share × mortgage factor)With FirstDoor's defaults (5% vacancy, 5% maintenance, 8% management), you keep 82% of rent. The mortgage factor is the monthly payment per $1 borrowed: about 0.00692 at 7.40% for 30 years, so each $100,000 of loan costs about $692 a month. With 20% down, the loan share is 0.80.
For the US median: ($1,677 × 0.82 − $100 insurance) ÷ (0.89% ÷ 12 + 0.80 × 0.00692) ≈ $203,000.
Tip: Check it on a real listing: put the asking rent into the full deal calculator and adjust the price until cash flow hits $0. The break-even rent guide runs the same math the other way, from price to rent.
Max break-even price in the 50 biggest rental markets
Each row uses that city's median 3-bedroom gross rent, its effective property tax rate (median taxes ÷ median value) and median home value from Census ACS 2024 1-year estimates, with 20% down at 7.40%, $1,200 a year insurance (assumed) and FirstDoor's default expenses. "% of median" is the break-even price as a share of the median home value. The last column is the down payment that would bring a median-priced home to $0 cash flow.
| City | 3-bed rent / mo | Tax rate | Median value | Max price | % of median | Down for $0 |
|---|---|---|---|---|---|---|
| Detroit, MI | $1,255 | 1.48% | $95,900 | $137,000 | 143% | 0% |
| Cleveland, OH | $1,105 | 1.55% | $109,600 | $118,000 | 108% | 12% |
| Memphis, TN | $1,418 | 0.93% | $209,800 | $168,000 | 80% | 38% |
| Philadelphia, PA | $1,573 | 0.83% | $253,600 | $191,000 | 75% | 42% |
| Kansas City, MO | $1,641 | 1.07% | $261,600 | $194,000 | 74% | 44% |
| San Antonio, TX | $1,707 | 1.54% | $260,900 | $190,000 | 73% | 47% |
| Baltimore, MD | $1,569 | 1.40% | $247,400 | $177,000 | 72% | 48% |
| Tucson, AZ | $1,688 | 0.59% | $299,700 | $213,000 | 71% | 45% |
| Tulsa, OK | $1,371 | 0.89% | $234,400 | $163,000 | 70% | 48% |
| Indianapolis, IN | $1,406 | 0.93% | $241,500 | $167,000 | 69% | 48% |
| Columbus, OH | $1,672 | 1.27% | $279,900 | $193,000 | 69% | 50% |
| Houston, TX | $1,819 | 1.43% | $301,200 | $207,000 | 69% | 50% |
| Cincinnati, OH | $1,588 | 1.42% | $263,300 | $179,000 | 68% | 51% |
| Oklahoma City, OK | $1,479 | 0.95% | $259,300 | $176,000 | 68% | 50% |
| Omaha, NE | $1,658 | 1.66% | $269,500 | $182,000 | 68% | 52% |
| Jacksonville, FL | $1,767 | 0.77% | $325,300 | $218,000 | 67% | 49% |
| Fort Worth, TX | $1,964 | 1.53% | $330,500 | $222,000 | 67% | 52% |
| El Paso, TX | $1,319 | 1.75% | $209,600 | $140,000 | 67% | 53% |
| Orlando, FL | $2,293 | 0.80% | $430,200 | $287,000 | 67% | 50% |
| Milwaukee, WI | $1,273 | 1.73% | $207,900 | $135,000 | 65% | 55% |
| Louisville, KY | $1,294 | 0.85% | $241,700 | $154,000 | 64% | 53% |
| Phoenix, AZ | $2,142 | 0.40% | $454,900 | $282,000 | 62% | 52% |
| Dallas, TX | $1,856 | 1.45% | $340,400 | $211,000 | 62% | 57% |
| Nashville, TN | $2,064 | 0.56% | $438,800 | $265,000 | 60% | 54% |
| Fresno, CA | $1,902 | 0.73% | $396,300 | $237,000 | 60% | 56% |
| Colorado Springs, CO | $2,145 | 0.40% | $479,500 | $283,000 | 59% | 55% |
| Las Vegas, NV | $2,067 | 0.49% | $458,300 | $268,000 | 59% | 56% |
| Albuquerque, NM | $1,550 | 0.85% | $324,600 | $187,000 | 58% | 58% |
| Charlotte, NC | $1,969 | 0.69% | $431,900 | $248,000 | 57% | 58% |
| Minneapolis, MN | $1,748 | 1.21% | $368,300 | $204,000 | 55% | 62% |
| Tampa, FL | $2,176 | 0.82% | $494,400 | $271,000 | 55% | 61% |
| Chicago, IL | $1,661 | 1.51% | $341,200 | $186,000 | 54% | 65% |
| Denver, CO | $2,570 | 0.48% | $636,400 | $338,000 | 53% | 60% |
| Raleigh, NC | $1,909 | 0.72% | $450,300 | $239,000 | 53% | 62% |
| Sacramento, CA | $2,170 | 0.76% | $515,800 | $272,000 | 53% | 62% |
| Atlanta, GA | $1,918 | 1.01% | $462,200 | $231,000 | 50% | 66% |
| Portland, OR | $2,364 | 1.01% | $588,200 | $288,000 | 49% | 67% |
| Austin, TX | $2,217 | 1.31% | $571,000 | $259,000 | 45% | 72% |
| Washington, DC | $2,567 | 0.63% | $733,400 | $331,000 | 45% | 68% |
| Miami, FL | $2,179 | 0.86% | $598,200 | $270,000 | 45% | 70% |
| Jersey City, NJ | $2,249 | 1.60% | $571,700 | $254,000 | 44% | 75% |
| San Diego, CA | $3,052 | 0.62% | $980,700 | $397,000 | 40% | 72% |
| Long Beach, CA | $2,676 | 0.67% | $849,500 | $343,000 | 40% | 72% |
| Seattle, WA | $2,951 | 0.79% | $950,800 | $374,000 | 39% | 74% |
| Boston, MA | $2,153 | 0.62% | $722,800 | $275,000 | 38% | 74% |
| Los Angeles, CA | $2,564 | 0.65% | $947,900 | $329,000 | 35% | 77% |
| Oakland, CA | $2,474 | 0.98% | $884,000 | $303,000 | 34% | 80% |
| San Jose, CA | $3,368 | 0.75% | $1,271,200 | $432,000 | 34% | 79% |
| New York, NY | $2,094 | 0.86% | $778,600 | $259,000 | 33% | 80% |
| United States | $1,677 | 0.89% | $360,600 | $203,000 | 56% | 60% |
Only 2 of these 49 cities (Detroit, MI and Cleveland, OH) have a break-even price above the median home value. In 25, the break-even price is under 60% of the median. The range runs from 143% in Detroit, MI to 33% in New York, NY.
Good to know: These are citywide survey medians with margins of error. The median rental and the median owner-occupied home are different houses, so this compares typical numbers, not one property. ACS gross rent includes utilities the renter pays, so a landlord's actual rent can be lower. ACS reports rents above $3,500 only as "$3,500+", so San Francisco, CA is left out. Each city links to its market page.
How to use your max price
Your break-even price is a ceiling. To set an offer you can live with:
- Use real rent comps. The whole number rests on rent, so pull comparable rentals instead of trusting the listing.
- Use the real tax bill and insurance quote. A higher tax rate cuts your max price fast. See property taxes by city and insurance costs.
- Subtract a cushion. If you want $200 a month of cash flow, solve for the price that leaves $200, not $0. Each $100 of monthly cushion at today's rate is worth roughly $15,900 of price.
- Remember cash to close. A lower price that works may still need more cash than you have. The cash-to-close guide covers that.
Red flag: Paying more than break-even because "rents will go up." That is a bet on the market. If the deal only works with a future raise or a future refinance, it does not work yet.
Worked example
A rental renting for the US median 3-bedroom gross rent ($1,677/mo, Census ACS 2024) bought at its break-even price of $203,000. 20% down at 7.40% for 30 years (Freddie Mac average, October 15, 2026), property tax at the US effective rate of 0.89% ($1,808/yr), $1,200/yr insurance (assumed), 5% vacancy, 5% maintenance, 8% management, closing costs assumed at 3% ($6,090).
| Price | $203,000 |
| Rent / mo | $1,677 |
| Mortgage (P&I) | −$1,124 |
| Operating costs (/mo) | −$553 |
| At the median price ($360,600) | −$990/mo |
Frequently asked questions
How much should I pay for a rental property?
No more than the price at which it breaks even, and ideally less so you keep a cushion. At 7.40% with 20% down and typical expenses, a home renting for $1,677 a month breaks even at about $203,000, roughly 121 times the monthly rent at the US property tax rate.
Can a typical rental cash-flow at today's rates?
Usually not at the median price. Across the 49 big US rental markets FirstDoor compared, only 2 had a break-even price above the median home value (Census ACS 2024, 7.40% rate, 20% down). Nationally the break-even price is about 56% of the median value.
How much down payment makes a rental cash-flow?
It depends on the price and rent. For a home at the US median value ($360,600) renting for the median 3-bedroom rent ($1,677), it takes about 60% down to reach $0 cash flow at 7.40%. The city table shows the figure for 50 markets.
Is the 1% rule a good way to set a max price?
It is a quick screen: price no more than 100 times monthly rent. At today's rates many homes that pass it still lose money once taxes and insurance are counted, so solve for break-even with real numbers before you offer.
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Sources
Educational content, not financial advice. Loan programs and requirements change; confirm with a lender.