Add up the monthly mortgage payment, property taxes at the level you will pay once the homestead exemption is gone, landlord insurance, the management fee, HOA dues, a maintenance allowance and a vacancy allowance. Compare that total with a rent estimate built from comparable homes that leased in the last few months, not from asking rents or an online estimate. If the rent clears the total with room to spare, it covers. If it clears by a hundred dollars, one empty month wipes out the year.
The worksheet below is the one I run for owners in Keller, North Richland Hills and Fort Worth who are deciding whether to rent out the house they live in. It takes an evening with your mortgage statement, your appraisal notice and a quote or two.
Start with the rent you can actually get
Every number on the cost side is knowable. The rent is the one you can get wrong, and most owners get it wrong by using asking rents from listings or an online estimate that averages a whole zip code. The number to use is what comparable houses in the same school zone, with similar size, age and condition, leased for in the last few months.
A manager with access to leased data can give you that in a free rental analysis, and the rental pricing guide explains how the comparables are chosen. Use the middle of the range, not the top, for this exercise. If the house only covers at the top of the range, it does not cover.
The monthly costs, in the order owners forget them
- Mortgage principal and interest, from the statement.
- Property taxes at the non-homestead level: current appraised value with no exemption and no cap, times the combined rate for your address, divided by twelve. This is the line owners most often understate.
- Landlord insurance, from an actual quote on a dwelling policy, not your current homeowners premium.
- Management fee: a percentage of collected rent in most agreements, so get a written quote with every fee listed.
- Leasing fee, spread over the expected length of the tenancy. If a new tenant costs a set amount every two years, divide it by twenty-four.
- HOA dues, including any master association.
- Maintenance allowance: a reasonable rule is a percentage of rent that rises with the age of the house and its systems.
- Vacancy allowance: at least one month of rent per year spread across twelve, more for a house that will turn over often.
- Utilities and lawn care during vacancy, and any utility the lease leaves with the owner.
Everything on that list leaves your account whether or not a tenant is in the house, except the management fee. That is why the vacancy line is not optional.
A worked example you can copy
Say the house is in North Richland Hills and leased comparables support $2,400 a month. The mortgage payment for principal and interest is $1,350. Taxes at the non-homestead level come to $7,200 a year, or $600 a month. The landlord policy quote is $1,800 a year, or $150. Management is quoted as a percentage of collected rent; for the example, call it $200. A leasing fee equal to one month's rent every two years is $100 a month. HOA dues are $40. Maintenance at a modest percentage of rent is $150. Vacancy at one month a year is $200.
Total: $2,790 against $2,400 in rent. On these illustrative numbers the house does not cover, by almost $400 a month, and that is before a water heater or a turnover. Change the mortgage to one with a $900 payment and it covers by about $60, which is the same as not covering. The point of the worksheet is to see that before a tenant is in the house, not after.
Three mistakes that make the rent look like it covers when it doesn't
The first is using the tax and insurance figures from your current escrow, which reflect a homestead exemption and an owner-occupant policy you will not have. The second is counting twelve months of rent and zero months of vacancy, when every lease ends and every turnover takes time. The third is leaving out the leasing fee and the turnover cost because they are not monthly, when they are the largest single expenses most rentals carry.
Fix all three and a house that looked like it cleared by $300 often clears by nothing. That is the honest number, and it is better to meet it on paper than in your bank account.
What "covers" should mean: cash flow versus the full return
Rent covering costs means the house does not need money from you each month. It does not mean the house is a good investment, and a house that falls slightly short is not always a bad one. Every mortgage payment reduces the loan balance, the house may appreciate, and the tax treatment of a rental differs from a residence. Those are real returns that never show up in the monthly check.
The rental property return guide works a full example from gross rent to cash-on-cash and total return. For the cover question, the rule is simpler: a small negative is a bill you choose to pay for the other returns, and a large negative is a reason to sell.
What to do if it doesn't cover
Rent only moves if the comparables say it can; pricing above them buys vacancy, not income. The cost side has more room. Protest the appraisal if the value is high. Shop the landlord policy with two or three carriers and look at the wind and hail deductible. Refinance only if the rate makes sense, and ask the lender about the rental before you do. Ask the HOA whether anything is optional. Confirm which fees in the management quote are optional or trigger-based.
If the honest number is still negative and you cannot carry it from a reserve, the guide for owners whose rent barely covers the mortgage walks through the choices, including the one where selling is right.
How Perpetual handles this
We run this worksheet with owners before anyone signs anything. The rent side comes from a free rental analysis built on leased comparables in your school zone, because we are broker-owned and local to Keller, North Richland Hills and Fort Worth and have access to what houses actually leased for. The cost side comes from your numbers and from our written quote, which lists every fee and what triggers it, so the management line in your worksheet is a real figure rather than a guess.
If the house covers, we tell you by how much and what would change that. If it does not, we say so, and we will tell you whether the gap is fixable or whether selling is the better answer. Once you are renting, monthly statements and the owner portal show the actual numbers against the worksheet every month. Our pricing and fees page explains how the quote is structured before you ever ask for one.
The takeaway: Build the cost side with rental-level taxes, a real insurance quote, a written management quote and a vacancy line, then test it against leased comps, not hopes.
Questions owners ask
What percentage of rent should I budget for maintenance on a rental house?
There is no single right figure, because it depends on the age of the roof, HVAC, water heater and plumbing more than on the rent. A newer house with recent systems needs less; a house past twenty years with original equipment needs more. Set the allowance from the systems you actually have, then add a separate reserve for the big replacements rather than hoping the monthly allowance accumulates in time.
Do I include the leasing fee when working out whether rent covers my costs?
Yes. It is not a monthly charge, but it recurs every time a tenant changes, and leaving it out is one of the most common reasons the worksheet looks better than reality. Divide the leasing fee by the number of months you expect a tenant to stay and carry that figure as a monthly line, alongside a vacancy allowance for the weeks between tenants.
Should I use my current escrow payment for taxes and insurance?
No. The escrow reflects a homestead exemption and an owner-occupant policy, and both change when the house becomes a rental. Recalculate taxes from the current appraised value with no exemption and no cap, and get a landlord policy quote. The difference between the escrow figure and the rental figure is often several hundred dollars a month on a house in this area.
Is it worth renting out a house that only breaks even?
It can be, if the mortgage rate is low, the house is likely to appreciate, you have a reserve to carry a bad month and you plan to hold for years, because loan paydown and appreciation are returns the monthly check does not show. It is not worth it if a single repair would put you in trouble or if you would be anxious every month. Break-even on honest numbers is a choice, not a mistake.
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Property management in Keller, North Richland Hills and Fort Worth. How full-service management works in Tarrant County →
