Ask what landlords make and you get two useless answers: a figure from someone selling a course, or an average that mixes a spare bedroom with a 300-unit building. The IRS publishes something better, because it counts what every landlord actually reported, line by line.
What do landlords report to the IRS?
Rental income goes on Schedule E, and the IRS publishes estimated totals for every line of it. For tax year 2023, Publication 4801 counts 20,158,505 Schedule E forms filed, with rents received reported on 8,914,988 returns. Here are the lines that matter, with the IRS figures as published.
| 2023 total | Returns reporting it | |
|---|---|---|
| Rents received | $436.7 billion | 8,914,988 |
| Total expenses | $414.8 billion | 9,021,344 |
| Rents minus expenses | $21.9 billion | 9,222,639 |
| Depreciation, part of those expenses | $113.9 billion | 7,243,667 |
| Mortgage interest, part of those expenses | $62.5 billion | 4,450,123 |
| Property taxes, part of those expenses | $63.9 billion | 7,857,535 |
Read the first three rows together and the picture is stark. Across the country, rental expenses ate 95% of rental income in 2023. That is the number to hold on to when someone describes rent as income.
Then read the fourth row. $113.9 billion of those expenses was depreciation, which is a deduction, not a bill. No money left anyone’s account for it. Strip depreciation out of the expenses and the same properties look very different, which is the whole reason rental property depreciation matters so much to what a rental is worth owning.
The spread is just as telling. The same publication shows positive rental and royalty income totaling $154.7 billion on 7,114,342 returns, and losses of $75.9 billion on 4,473,169 returns. Millions of landlords reported a loss. Millions reported a profit. An average across both tells you nothing about either.
A reported loss is not the same as money lost, which is the part that trips people up. Depreciation can turn a house that puts cash in your pocket into a loss on paper, and the publication shows $61.5 billion of rental real estate losses that were deductible after the limitation on 3,925,866 returns, with another $35.8 billion that was not deductible at all. So the IRS totals describe tax results, not bank balances, and the two can point in opposite directions on the same house.
Do most landlords even have a mortgage?
A lot of them do not, which breaks most comparisons before they start.
The Census Bureau and HUD run the Rental Housing Finance Survey, and its 2024 methodology tables estimate 18,965,000 rental properties nationally, with 6,502,000 carrying a mortgage and 10,814,000 carrying none. Another 1,649,000 did not report their mortgage status. The reference period is all 12 months of 2023.
A paid-off rental and a financed one earn the same rent and keep wildly different amounts of it. On the house below, the mortgage is $15,967 a year, which is three times the cash flow. Remove it and the same house makes $21,010 instead of $5,043. So when you see a landlord’s monthly figure, the first question is whether anyone is holding a note on the house. Should you pay cash for a rental property runs that comparison properly.
What does one rental actually make?
National totals cannot tell you what to expect from a house, so here is a single one. It costs $250,000, bought with 20% down on a 30-year loan at 7%, with 3% closing costs, so $57,500 of cash goes in. It rents for $2,750 a month. Property tax is $3,000 a year and insurance $1,400. Vacancy is set at 5%, maintenance and big repairs at 5% of rent each, and a property manager takes 8%.
| Amount | |
|---|---|
| Rent | $33,000 |
| Vacancy (5%) | −$1,650 |
| Maintenance (5%) | −$1,650 |
| Big repairs (5%) | −$1,650 |
| Property management (8%) | −$2,640 |
| Property tax and insurance | −$4,400 |
| Mortgage | −$15,967 |
| Cash flow for the year | +$5,043 |
These are example figures, not a forecast for any market.
That is $420 a month, and 8.8% on the $57,500 that went in. Before the mortgage, the house earns $21,010, which is an 8.4% cap rate on the price. The loan takes three quarters of it.
Notice how much of the gap between $33,000 of rent and $5,043 of cash is not the mortgage. Vacancy, repairs and management take $7,590 a year before a single dollar reaches the lender. Those are the lines beginners leave out, and leaving them out is how a house that clears $420 gets described as clearing $1,000. How to work out rental cash flow goes through each one.
Why is there no average worth quoting?
Four things move a landlord’s result more than skill does.
- Whether there is a loan, and at what rate. The same house with no mortgage makes four times as much cash.
- How many houses. One house clearing $420 is $5,043 a year. Ten of them is a job.
- How long they have owned it. A house bought ten years ago has rent from today against a payment from then.
- Who does the work. Drop the manager from the example and cash flow goes from $5,043 to $7,683, but you are now the one taking the calls.
That is why the IRS totals are more useful than any average built from them. They show the shape of it: a very large amount of rent, almost as large a pile of expenses, more than a quarter of the expense total being depreciation rather than cash, and millions of landlords on each side of break-even.
Work out what yours would make
Put a real address into the rental calculator with your own rate and down payment, and leave vacancy, maintenance, big repairs and management switched on even if you plan to self-manage. Then look at the annual cash flow rather than the monthly one, because that is the number a year of repairs is paid out of. For what counts as a decent result once you have it, see how much a rental should cash flow.