I once saw a table calculating rental income in Burlington that completely omitted management fees. It was organized as if everything except the mortgage was profit. Even within the same city, the situation varies depending on whether you are closer to downtown or South Burlington; if you neglect property taxes, insurance, and maintenance costs, the numbers will always look better than they actually are.

To set a benchmark, you need to look at the total return rate first. This is calculated by dividing the annual rental income by the purchase price. According to Zillow, the median monthly rent in Burlington is $2,100, and Redfin reports the recent median home price is $500,000. Dividing the annual rental income of $25,200 by the purchase price gives a total return rate of 5.04%. This is not a bad level compared to other areas in Vermont.

The next step is the problem. To calculate the cap rate by dividing the net operating income by the purchase price, you need to subtract property taxes, insurance, management fees, maintenance costs, and vacancy losses. Burlington is different from other cities in this regard. According to Ownwell, Burlington's effective property tax rate is 2.11%, which is significantly higher than the Vermont median of 1.92% and the national median of 1.02%. The 50% rule, which assumes operating costs are half of rental income, is just an average assumption; in areas like Burlington where property taxes are a significant portion, actual operating costs may exceed 50%. If we calculate based on the 50% rule, the net operating income is $12,600 per year, and the cap rate is 2.52%.

What happens if you take out a loan? Assuming a 20% down payment and 3% closing costs, the actual investment amount is $115,000. If you take out a $400,000 loan at a fixed interest rate of 6.67% for 30 years based on Freddie Mac's August 2026 rates, the principal and interest payment will be $2,573 per month, totaling $30,881 annually. Subtracting this from the net operating income of $12,600 results in an annual loss of $18,281, and the cash-on-cash return drops to around -16%. Moreover, as mentioned earlier, if property taxes exceed the 50% rule, the actual numbers could be even lower.

When comparing downtown and South Burlington side by side, the rent multiplier relative to the purchase price is similar in both areas, around 19 times. However, the structure of property taxes and management fees varies slightly by neighborhood, which can affect the actual cap rate. According to the 1% rule, if the monthly rent is over 1% of the purchase price, the cash flow is likely to be healthy. In this calculation, the rent is only 0.42% of the purchase price, suggesting that a long-term holding strategy is a more realistic choice than leveraging for short-term cash flow.

Given that the University of Vermont is located here, there is a steady demand for rentals from students and young professionals. Families moving from other states should also consider that their property tax burden may increase compared to their previous state. Total returns should account for not only monthly cash flow but also appreciation and asset growth from loan principal repayment. The ratings of school districts near areas of interest for Korean families can be checked on GreatSchools or Niche, but since boundaries change frequently, it's advisable to verify the assigned school for the specific address before purchasing.

With the University of Vermont and nearby medical facilities, rental demand remains steady year-round, particularly from students and hospital staff. However, the limited supply of new housing means that purchase prices do not easily decrease, which is also why the rent multiplier compared to prices does not narrow easily. During the winter tourist season, some landlords may switch to short-term rentals, but regulations vary by area, so it's necessary to check separately.

To avoid omitting management fees, it's best to follow this order when calculating:

• First, check the purchase price level against rental income using the total return rate.
• Recalculate the cap rate by reflecting the total operating costs, including property taxes.
• Incorporate loan conditions to check the cash-on-cash return.

Property tax rates, management fees, and loan interest rates can vary by neighborhood and time, so consider the numbers in this article as examples and verify the latest data before making an actual purchase. This article does not constitute investment or legal advice, and consulting a professional before finalizing any contracts is recommended.