If you’re investing in rental properties, you’ve probably run the numbers, projected your cash flow, and thought, This deal looks great! But then reality hits—unexpected expenses eat into your profits, and your “cash-flowing” property is suddenly break-even (or worse).

Here are some of the biggest cash flow killers to watch out for:

1. Property Taxes

• One of the biggest and most overlooked expenses in real estate.

• Can increase significantly, especially after purchasing a property at a higher price than the previous owner.

• Solution: Research tax assessments, protest high valuations, and consider landlord-friendly states with lower tax burdens.

2. Rising Insurance Costs

• Insurance premiums have skyrocketed in many markets due to natural disasters, inflation, and increased claims.

• Solution: Shop around, bundle policies, increase deductibles, and consider self-insuring for smaller claims to avoid premium hikes.

3. Vacancy & Repairs (Property Class Matters!)

• A property’s class (A, B, C, or D) dictates its rentability, maintenance needs, and vacancy rates.

• Lower-class properties (C & D) tend to have higher turnover and repair costs.

• Solution: Understand the trade-offs—higher cash flow potential often comes with higher expenses. Screen tenants well and budget for vacancies.

4. Tenant Avatar: Who Are You Renting To?

• Your tenant profile is directly tied to your property’s class and location.

• High-end rentals attract stable tenants but might sit vacant longer.

• Lower-end rentals may have more turnover, late payments, or evictions.

• Solution: Align your property with the right tenant base, offer incentives for longer leases, and build good tenant relationships.

🔹 Big takeaway: The best real estate investors don’t just look at cash flow on paper—they anticipate these hidden costs and build a cushion into their numbers.

What’s been the biggest cash flow killer in your experience? Let’s discuss!