Is my cash flow really $135.75/month?

[Seth B.]

I bought a duplex a couple of months ago. Here are the numbers:

Purchase price $85,000 (I put 25% down)

Monthly payment including taxes and insurance is $585/month

Total rent for both sides is $1,550/month

Property Management charges 7% ($108.50/month)

Tenants pay all utilizes (including water, garbage, electricity, ect..)

If I use the 50% rule, as Bigger Pockets and others who are experienced in rentals over the long term use. Then total rent $1,550 minus management fee's of $108.50 equals $1,441.5 divided by 2 for the 50% rule equals $720.75 minus my mortgage/insurance/tax payment of $585 equals a positive cash flow of $135.75/month

Is this correct? If so, how do rentals make people money? Do people just hope for appreciation, and think about how they are paying down the mortgage over time? How do people claim to live just off of rental income, by owning 30+ properties? I would think if you had the money to buy 30 properties, with the 50% rule you would have made more of investing in an IRA, stocks or something to that effect?

This was my first buy and hold rental property and if these numbers are correct I am not sure I made a good decision buying it. Maybe I should have used the down payment to try a real estate flip or invest it in an IRA/stock market (smart stocks though like Nike, Apple ect....).

I guess I am lucky that I really searched hard for a property that would return this kind of gross rent compared to the purchase price/mortgage payment just to basically break even. I see a lot of first time rental property investors buy a rental property that rents for $1,000/month and have a mortgage payment of $800/month. So I assume they will lose money over the long term and may decide to sell early when they run out of money to throw at it?

Any thoughts from experienced rental property investors?