Over time your profit margins will get higher and higher allowing you to take more home.On the other hand, if you area nearing retirement and want PURE cash flow than you might want to trade to better performing pure cash flows.We personally plan on trading or houses up for more and more until we retire using the 1031 exchange!

I follow the southwest airline margin, with higher "level" investments but keeping a closer control over my the margins. 

Here are the details when I breakout the estimated cost:Rent = 1,000Vacancy (100)  --> 10% of gross rentProperty taxes (229) --> 23% of gross rent  (100K x 2.75% / 12)Property insurance (100) --> 1% of property valueProp Mgmt (100)  ---> 10% of gross rentMaint Reserve (100) ---> 10% of gross rentCapEx Reserve (100) --> 10% of gross rentOperating Income = 271 --> 27% margin %Mortgage payment (240)  --> used mortgage calculator $40K, 30 years, 6% (assumes 20% down paymentMonthly cash flow $37Annual cash flow $372Cash on cash return = 3.7% ---> 372 / 10,000 for 20% down paymentWhen I add up the monthly costs and maintenance/capex reserves, this works out to 63% of gross rent which is quite a bit more than the 50% rule .Am I being ridiculously conservative here with my expense estimates or does our high property taxes make it that more difficult to find a profitable cash flowing rental property?  

For me as a value investor the key requirement is to have a margin of safety and one of the main ways to have a margin of safety with income properties is to have good positive cash flow.Some people have hard boundaries around cash flow, like a deal must cash on cash 10 or 12% but in a 2.2% 10yr Treasury world to get that kind of spread requires battling in war zones or taking on serious risk of some kind.

I'm not sure that this is the place I'd start: a 10 unit apartment building where the margins are tight and you're cashflow negative.

They often are wholesalers but if your margin is good, they can be a great way to get a quick sale.

We have done very well in the class A market watching our tight margins.

@Kendell Wolfe One of the advantages of real estate is that it allows you to safely leverage your investing (unlike, say, buying stocks on margin).  

You better have a maintenance budget and hope the rents are at market premium or you're in for slim margins and frustration. 

@Jon Klaus might be interested since in your neck of the woods, and if the margin is there to make it worth his while.