July 01, 2025

Is It Still Worth Investing in Rental Property in 2025?

Wondering if 2025 is too risky to buy a rental property—especially when rent barely covers the mortgage? Here's what the numbers (and smart investors) say:

In 2025, buying a rental property still makes sense—if the deal pencils out. But with higher interest rates and tight rent-to-price ratios, you can’t afford to skip the math. If rent only covers 68% of the mortgage, you’re not just cash flow negative—you’re gambling on appreciation. And that’s not investing. It’s speculating.

Let’s break this down with some real talk and spreadsheet-friendly analysis.

Why the “68% of Mortgage” Warning Sign Is a Deal Breaker

Let’s say you buy a duplex for $350,000 with 20% down. Your monthly mortgage (at 7% over 30 years) is roughly $1,860. If you can only rent the unit for $1,260—you’re already $600 short every month.

And that’s before:

Property taxes
Insurance
Vacancy loss
Repairs
CapEx reserves
Property management

Even if you self-manage and defer maintenance, the math just doesn’t work.

Use a Rental Property Analysis Spreadsheet to Run the Numbers

Don’t rely on vibes or Reddit opinions. Use a spreadsheet to stress-test your deal:

Key Inputs You’ll Need:

Purchase price and down payment
Loan terms (interest rate, loan length)
Expected rents (real comps, not best-case Zillow)
Monthly expenses (PM fees, taxes, insurance, HOA, etc.)
CapEx & vacancy rate assumptions

Outputs to Focus On:

Cash-on-Cash Return (CoC)
Cap Rate
Monthly cash flow
5- to 10-year IRR if you sell

👉 Our Rental Property Analysis Spreadsheet includes all of this—plus:

Rent & expense sensitivity sliders
Flip vs hold toggle
Investor partner share calculator
Lender printout page
Exit-year return projections

Is a Townhouse Duplex a Good Investment in 2025?

That depends on three questions:

1. Does it cash flow NOW—without appreciation?

If not, skip it. Hope is not a strategy.

2. Can rents realistically increase?

Look at rental comps. If your unit rents for $1,200, but similar ones are getting $1,500 after basic cosmetic updates, you might have upside. Otherwise, you’re stuck.

3. Are you factoring in all costs?

Many first-timers forget to budget for:

8% property management
5–10% vacancy
10% CapEx
1% maintenance
A property that “only loses $200/month” might actually be bleeding $600 once all expenses hit.

What 2025 Market Conditions Mean for First-Time Investors

You’re not alone if you’re seeing meh cash flow deals.

Why It’s Tough Right Now:

High rates: 7%+ mortgage rates kill affordability
Sticky prices: Sellers haven’t lowered prices enough to reflect higher borrowing costs
Low rent growth: Rent increases are slowing in most major metros

But you still have options.

How to Invest Wisely in 2025

✅ Run every deal through a rental analysis spreadsheet
✅ Be ruthless with your assumptions (use 8% vacancy, 10% CapEx)
✅ Buy only if it cash flows from Day 1
✅ Look outside your local market if your city is overpriced
✅ Build a repair reserve—72% of rookie investors mis-price repairs and get wrecked

A Real Example from My Own Investing

In 2023, I passed on a fourplex because the rent-to-price ratio was weak—about 0.5%. Everyone said, “But it’s appreciating fast!” Well, it dropped 10% in value by mid-2024. I would’ve been negative $700/month and underwater.

Instead, I bought a small duplex in a secondary market with a 1.2% rent-to-price ratio. It cash flows $310/month after all expenses—and that includes professional management.

That’s what smart investing in 2025 looks like.

TL;DR: Is It Worth Buying a Rental in 2025?

Yes—but only if the deal cash flows from day one.

Avoid any deal where the rent doesn’t even cover the mortgage. That’s not a value-add—it’s a value trap. Use a rental property analysis spreadsheet to crunch the numbers properly, and only move forward when the math and the strategy make sense.