Short answer: Only if appreciation and loan paydown outweigh the monthly loss and you can afford to carry it. A median-priced US home with 20% down at 7.32% loses about $974 a month and needs about 2.48% yearly price growth to break even on paper, before selling costs and tax (Census ACS 2024; Freddie Mac, October 22, 2026). US prices rose 3.03% over the last year (FHFA).
Definition
Negative cash flow means a rental costs more each month than it brings in: rent does not cover the mortgage, taxes, insurance, HOA and budgets for vacancy, maintenance and management, so the owner pays the difference out of pocket and is betting on appreciation and loan paydown.
By the numbers: The US median home with 20% down at 7.32% loses about $974/mo and needs about 2.48% yearly price growth to break even on paper; US prices rose 3.03% over the last year (Census ACS 2024; FHFA; Freddie Mac, October 22, 2026).
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Starts at the US median home ($360,600) and 3-bed rent ($1,677/mo), Census ACS 2024, at Freddie Mac's 7.32% rate. Assumes tax at 0.89% of price (US median), $1,200/yr insurance, 3% closing costs, 5% vacancy, 5% maintenance and 8% management. Adjust all of these in the full calculator.
The short answer
Only if the home's value rises fast enough to cover what you pay in every month, and you can afford to keep paying if it doesn't. A median-priced US home ($360,600) renting for the median 3-bedroom rent ($1,677/mo) with 20% down at 7.32% loses about $974 a month after every cost, or $11,689 in year one. The tenant's rent pays down about $2,754 of the loan that year.
To break even on paper, the home has to gain about 2.48% a year. US home prices rose 3.03% over the last year (FHFA, Q2 2026), so the typical rental would have come out slightly ahead on paper, with real money going out every month to get there. Across 98 big US rental markets the typical city needs about 2.16% a year.
Good to know: This is educational, not investment advice. "On paper" means before selling costs, income tax and depreciation, which FirstDoor leaves out to keep the comparison simple. You only collect appreciation when you sell or refinance; the monthly loss is cash out of your pocket now.
The four ways a rental pays you
Cash flow is only one of them. A rental also pays you through loan paydown (the principal part of each payment), appreciation (a rise in value) and tax benefits such as depreciation. A negative cash flow rental bets that the second and third outweigh the first.
Appreciation needed = −(yearly cash flow + year-1 loan paydown) ÷ priceFor the US median home: −(−$11,689 + $2,754) ÷ $360,600 = 2.48%. Loan paydown is small early in a 30-year loan because most of each payment is interest, so it covers only about 24% of the yearly loss.
Tip: Run any listing through the rental property ROI calculator to see all three parts for year one and five years. Open the US median home at 2.48% appreciation.
How often prices have grown that fast
The Federal Housing Finance Agency's all-transactions index tracks US home prices back to 1975. Average yearly growth to Q2 2026:
| Period | US price growth / yr | Covers 2.48%? |
|---|---|---|
| Last 1 year | 3.03% | Yes |
| Last 5 years | 7.16% | Yes |
| Last 10 years | 6.81% | Yes |
| Last 20 years | 3.36% | Yes |
| Last 30 years | 4.47% | Yes |
Over every 5-year stretch since 1975 (186 quarterly windows), US prices grew slower than 2.48% a year in 31 of them (17%) and fell outright in 18. From the Q1 2007 peak to the Q2 2012 low, the index dropped 19%.
Here is the same US median home over five years with the ROI calculator's math (equity plus cash flow, before selling costs and tax):
| Price growth / yr | Year-1 total return | 5-year return / yr on cash in |
|---|---|---|
| 0% (flat) | −$8,935 | -18.6% |
| 2.48% (year-1 break-even) | $8 | -1.6% |
| 3.03% (last year) | $1,991 | 1.1% |
Breaking even in year one is not the same as making money. At 2.48% a year the five-year return is still -1.6% a year, mainly because the $10,818 in closing costs is gone the day you buy. Click a row to open it in the calculator.
Good to know: FHFA's index is a national average of repeat sales. Your city, and your house, can do much better or worse. Cash in is the $82,938 down payment and closing costs; selling a home costs more on top.
Appreciation needed in 98 cities
Each city's median-priced home renting for its median 3-bedroom gross rent, 20% down at 7.32% for 30 years, the city's median property tax, $1,200 a year insurance (assumed), 5% vacancy, 5% maintenance and 8% management. Loan paydown is year one. Sorted from least to most appreciation needed.
| # | City | Median value | Cash flow / mo | Year-1 loan paydown | Appreciation needed / yr |
|---|---|---|---|---|---|
| 1 | Detroit, MI | $95,900 | $284 | $733 | None needed |
| 2 | Cleveland, OH | $109,600 | $63 | $837 | None needed |
| 3 | Toledo, OH | $122,600 | $17 | $936 | None needed |
| 4 | Pittsburgh, PA | $220,400 | −$120 | $1,683 | None needed |
| 5 | Birmingham, AL | $189,800 | −$173 | $1,450 | 0.33% |
| 6 | Rochester, NY | $164,300 | −$182 | $1,255 | 0.56% |
| 7 | Memphis, TN | $209,800 | −$252 | $1,602 | 0.68% |
| 8 | Gainesville, FL | $270,800 | −$335 | $2,068 | 0.72% |
| 9 | Lubbock, TX | $223,600 | −$283 | $1,708 | 0.75% |
| 10 | Buffalo, NY | $187,000 | −$257 | $1,428 | 0.89% |
| 11 | Corpus Christi, TX | $234,000 | −$328 | $1,787 | 0.92% |
| 12 | Philadelphia, PA | $253,600 | −$379 | $1,937 | 1.03% |
| 13 | Kansas City, MO | $261,600 | −$425 | $1,998 | 1.19% |
| 14 | Tucson, AZ | $299,700 | −$511 | $2,289 | 1.28% |
| 15 | San Antonio, TX | $260,900 | −$470 | $1,993 | 1.40% |
| 16 | St. Petersburg, FL | $436,200 | −$801 | $3,332 | 1.44% |
| 17 | Wichita, KS | $212,900 | −$392 | $1,626 | 1.45% |
| 18 | Tulsa, OK | $234,400 | −$437 | $1,790 | 1.48% |
| 19 | Baltimore, MD | $247,400 | −$462 | $1,890 | 1.48% |
| 20 | Norfolk, VA | $311,200 | −$590 | $2,377 | 1.51% |
| 21 | Hialeah, FL | $446,800 | −$848 | $3,413 | 1.51% |
| 22 | Indianapolis, IN | $241,500 | −$462 | $1,845 | 1.53% |
| 23 | Irving, TX | $349,800 | −$674 | $2,672 | 1.55% |
| 24 | St. Louis, MO | $214,500 | −$416 | $1,638 | 1.56% |
| 25 | Jacksonville, FL | $325,300 | −$647 | $2,485 | 1.62% |
| 26 | Oklahoma City, OK | $259,300 | −$518 | $1,981 | 1.64% |
| 27 | Columbus, OH | $279,900 | −$564 | $2,138 | 1.65% |
| 28 | Orlando, FL | $430,200 | −$869 | $3,286 | 1.66% |
| 29 | Houston, TX | $301,200 | −$623 | $2,301 | 1.72% |
| 30 | Tallahassee, FL | $294,500 | −$615 | $2,249 | 1.74% |
| 31 | Cincinnati, OH | $263,300 | −$557 | $2,011 | 1.78% |
| 32 | Mesa, AZ | $440,800 | −$949 | $3,367 | 1.82% |
| 33 | Aurora, CO | $494,600 | −$1,068 | $3,778 | 1.83% |
| 34 | Phoenix, AZ | $454,900 | −$995 | $3,475 | 1.86% |
| 35 | New Orleans, LA | $305,100 | −$670 | $2,330 | 1.87% |
| 36 | Fort Worth, TX | $330,500 | −$727 | $2,524 | 1.87% |
| 37 | Omaha, NE | $269,500 | −$593 | $2,059 | 1.88% |
| 38 | Louisville, KY | $241,700 | −$537 | $1,846 | 1.90% |
| 39 | Spring Valley, NV | $440,200 | −$985 | $3,362 | 1.92% |
| 40 | Winston-Salem, NC | $281,200 | −$639 | $2,148 | 1.96% |
| 41 | El Paso, TX | $209,600 | −$477 | $1,601 | 1.97% |
| 42 | Arlington, TX | $337,800 | −$780 | $2,580 | 2.01% |
| 43 | Virginia Beach, VA | $403,200 | −$931 | $3,080 | 2.01% |
| 44 | Nashville, TN | $438,800 | −$1,025 | $3,352 | 2.04% |
| 45 | Greensboro, NC | $290,200 | −$679 | $2,217 | 2.04% |
| 46 | Colorado Springs, CO | $479,500 | −$1,135 | $3,663 | 2.08% |
| 47 | Milwaukee, WI | $207,900 | −$499 | $1,588 | 2.12% |
| 48 | Las Vegas, NV | $458,300 | −$1,109 | $3,501 | 2.14% |
| 49 | Fresno, CA | $396,300 | −$959 | $3,027 | 2.14% |
| 50 | Lexington, KY | $318,400 | −$782 | $2,432 | 2.18% |
| 51 | Knoxville, TN | $294,700 | −$728 | $2,251 | 2.20% |
| 52 | Dallas, TX | $340,400 | −$861 | $2,600 | 2.27% |
| 53 | Bakersfield, CA | $406,500 | −$1,028 | $3,105 | 2.27% |
| 54 | Tempe, AZ | $488,600 | −$1,244 | $3,732 | 2.29% |
| 55 | Henderson, NV | $520,400 | −$1,328 | $3,975 | 2.30% |
| 56 | Charlotte, NC | $431,900 | −$1,107 | $3,299 | 2.31% |
| 57 | Albuquerque, NM | $324,600 | −$844 | $2,479 | 2.36% |
| 58 | Durham, NC | $439,400 | −$1,167 | $3,356 | 2.42% |
| 59 | Denver, CO | $636,400 | −$1,746 | $4,861 | 2.53% |
| 60 | Stockton, CA | $456,800 | −$1,255 | $3,489 | 2.53% |
| 61 | Tampa, FL | $494,400 | −$1,369 | $3,776 | 2.56% |
| 62 | Riverside, CA | $616,400 | −$1,729 | $4,708 | 2.60% |
| 63 | Reno, NV | $567,700 | −$1,599 | $4,336 | 2.62% |
| 64 | Raleigh, NC | $450,300 | −$1,280 | $3,439 | 2.65% |
| 65 | Sacramento, CA | $515,800 | −$1,480 | $3,940 | 2.68% |
| 66 | Minneapolis, MN | $368,300 | −$1,063 | $2,813 | 2.70% |
| 67 | Lincoln, NE | $278,200 | −$814 | $2,125 | 2.75% |
| 68 | Richmond, VA | $377,900 | −$1,118 | $2,886 | 2.79% |
| 69 | Tacoma, WA | $500,500 | −$1,484 | $3,823 | 2.79% |
| 70 | St. Paul, MN | $301,800 | −$896 | $2,305 | 2.80% |
| 71 | Worcester, MA | $411,700 | −$1,225 | $3,145 | 2.81% |
| 72 | Alexandria, VA | $704,200 | −$2,135 | $5,379 | 2.87% |
| 73 | Plano, TX | $541,700 | −$1,653 | $4,138 | 2.90% |
| 74 | Chicago, IL | $341,200 | −$1,042 | $2,606 | 2.90% |
| 75 | Atlanta, GA | $462,200 | −$1,456 | $3,530 | 3.02% |
| 76 | Portland, OR | $588,200 | −$1,888 | $4,493 | 3.09% |
| 77 | Washington, DC | $733,400 | −$2,408 | $5,602 | 3.18% |
| 78 | Santa Ana, CA | $772,600 | −$2,554 | $5,901 | 3.20% |
| 79 | Madison, WI | $418,400 | −$1,409 | $3,196 | 3.28% |
| 80 | Miami, FL | $598,200 | −$2,027 | $4,569 | 3.30% |
| 81 | Newark, NJ | $396,600 | −$1,351 | $3,029 | 3.32% |
| 82 | Arlington, VA | $945,700 | −$3,325 | $7,223 | 3.46% |
| 83 | Honolulu, HI | $850,100 | −$3,006 | $6,493 | 3.48% |
| 84 | San Diego, CA | $980,700 | −$3,496 | $7,491 | 3.51% |
| 85 | Austin, TX | $571,000 | −$2,042 | $4,361 | 3.53% |
| 86 | Providence, RI | $413,800 | −$1,483 | $3,161 | 3.54% |
| 87 | Long Beach, CA | $849,500 | −$3,051 | $6,489 | 3.55% |
| 88 | Anaheim, CA | $892,200 | −$3,233 | $6,815 | 3.59% |
| 89 | Boston, MA | $722,800 | −$2,677 | $5,521 | 3.68% |
| 90 | Seattle, WA | $950,800 | −$3,530 | $7,262 | 3.69% |
| 91 | Salt Lake City, UT | $620,100 | −$2,312 | $4,736 | 3.71% |
| 92 | Jersey City, NJ | $571,700 | −$2,158 | $4,367 | 3.77% |
| 93 | Yonkers, NY | $521,700 | −$2,019 | $3,985 | 3.88% |
| 94 | Los Angeles, CA | $947,900 | −$3,719 | $7,240 | 3.94% |
| 95 | San Jose, CA | $1,271,200 | −$5,115 | $9,710 | 4.06% |
| 96 | New York, NY | $778,600 | −$3,217 | $5,947 | 4.19% |
| 97 | Oakland, CA | $884,000 | −$3,654 | $6,752 | 4.20% |
| 98 | Glendale, CA | $1,182,800 | −$4,960 | $9,034 | 4.27% |
| United States | $360,600 | −$974 | $2,754 | 2.48% |
4 cities (Detroit, MI, Cleveland, OH, Toledo, OH and Pittsburgh, PA) need no appreciation at all, 37 need less than 2% a year, and 24 need 3% or more. 75 of 98 would break even at last year's national 3.03%.
Good to know: These are citywide survey medians with margins of error, and the median rental and median owner-occupied home are different houses. ACS reports rents above $3,500 only as "$3,500+", so San Francisco, CA, Irvine, CA are left out, and taxes above $10,000 are capped at $10,000.
When a negative cash flow rental can make sense
Some investors buy negative on purpose. It is a reasonable choice only if every one of these is true:
- You can carry the loss for years. At the US median, that is $11,689 a year, or $58,446 over five years, on top of your down payment and reserves.
- The loss is small and fixed. A deal that is −$50 a month is a different bet from −$900. Check the break-even rent and how close you are.
- You would hold through a down market. Being forced to sell in a slump turns a paper loss into a real one.
- There is a concrete path to positive. A rent you can verify with comps, a planned rehab, or living in one unit, not a hoped-for refinance.
Red flag: A pitch that says "it pays for itself through appreciation." Appreciation is not cash. You pay the monthly loss for certain; the gain is a guess. See what good cash flow looks like and the rate that would make each city cash-flow.
Worked example
The US median home ($360,600, Census ACS 2024) renting for the US median 3-bedroom gross rent ($1,677/mo), 20% down at 7.32% for 30 years (Freddie Mac, October 22, 2026), the US median property tax ($3,211/yr), $1,200/yr insurance (assumed), 5% vacancy, 5% maintenance, 8% management, closing costs assumed at 3% ($10,818).
| Cash flow / mo | −$974 |
| Cash flow, year 1 | −$11,689 |
| Loan paydown, year 1 | $2,754 |
| Appreciation needed / yr | 2.48% |
| US price growth, last year (FHFA) | 3.03% |
Frequently asked questions
Is a negative cash flow rental property worth it?
Only if appreciation and loan paydown outweigh the monthly loss and you can afford to carry it. A median-priced US home with 20% down at 7.32% loses about $974 a month and needs about 2.48% yearly price growth to break even on paper, before selling costs and tax (Census ACS 2024; Freddie Mac, October 22, 2026). US prices rose 3.03% over the last year (FHFA).
How much appreciation does a rental need to make up for negative cash flow?
Divide the yearly loss minus the year-1 loan paydown by the price. For the US median home that is about 2.48% a year. Across 98 big US cities FirstDoor compared, the typical city needs about 2.16%; 4 need none and 24 need 3% or more.
How often do home prices grow that fast?
Over 5-year stretches since 1975, US prices grew slower than 2.48% a year in 31 of 186 quarterly windows (17%) and fell in 18, using the FHFA all-transactions index. The last 20 years averaged 3.36% a year.
Does loan paydown count as profit?
It builds equity, but you only get it back when you sell or refinance. Early in a 30-year loan it is small: about $2,754 in year one on the US median home's loan, which covers about 24% of its yearly cash loss.
Why does FirstDoor score negative cash flow as a pass?
Because the monthly loss is certain and the appreciation is not. FirstDoor's score is built for first-time investors, who usually can't afford to keep feeding a property through a flat or falling market.
Keep learning
Sources
Educational content, not financial advice. Loan programs and requirements change; confirm with a lender.