A family that moved out of their home in Riverside to another state asked how much rental income they could expect if they rented out their house. They believed the numbers on the real estate flyers represented pure profit, but we needed to revisit how those figures were calculated.

First, looking at the rental rates in Riverside, according to RentCafe, the average rent in July 2026 is $2,234, while a two-bedroom unit averages $2,378. The average home value, based on Zillow, is $652,797, which has decreased by 1.1 percent over the past year. Let's assume this family's home was purchased for $650,000 and the two-bedroom rent is $2,378 for our calculations.

The annual rental income would be $28,536, resulting in a total return rate of 4.39 percent. This was the figure listed on the flyer. However, this number does not account for property taxes, insurance, maintenance costs, or vacancy losses. To get a clearer picture of the actual money left over, we need to look at the cap rate, which is the net operating income divided by the purchase price.

Using the 50 percent rule to estimate operating expenses, the net operating income would be about $14,268, and the cap rate drops to 2.19 percent. The effective property tax rate in Riverside County is reported to be around 0.82 percent, which may feel low or high compared to the previous state's tax rate if you are moving from out of state, so it's advisable to compare directly.

If you are converting to a rental while still having a mortgage, the net cash flow will be the amount left after deducting the mortgage principal and interest. Even with a cap rate in the 2 percent range, the actual money coming in each month could be less depending on the remaining loan balance and interest rate. According to the 1 percent rule, the rent should be around $6,500, which is 1 percent of the purchase price, to ensure stable cash flow. In this case, it falls short, so considering long-term asset appreciation alongside immediate cash flow may be necessary.

Breaking down operating costs, maintenance expenses are typically around 1 percent of the asset value, and if you cannot manage the property directly and need to manage it remotely from another state, it is realistic to add 8 to 12 percent of the rent for property management fees. If you are moving out of state and find it difficult to manage directly, it's essential to factor in these costs from the beginning to avoid surprises later.

Even if the immediate cash flow is not substantial, from a total return perspective, you should also consider the principal repayment and appreciation. If, like this family, you are converting a home you already own into a rental, comparing the potential appreciation from selling it versus the total returns from holding onto it can be a useful strategy.

Property taxes and insurance can vary based on county and individual circumstances, so it's advisable to double-check the numbers with a tax and real estate professional before making the rental transition.

When moving to another state and leaving your previous home as a rental, the change in tax residency may also alter the reporting process for rental income. This information can only be provided generally, and since the handling may differ based on individual tax residency and income structure, it is recommended to consult with an accountant or tax professional separately.

Rather than making a decision based solely on the yield number from the flyer, calculating both the total return rate and the cap rate side by side will clarify how much money you will actually have left. Especially when converting to a rental with an existing mortgage, checking the net cash flow is the next step. As you prepare for a move, you will need to make several decisions at once, so it's wise to take your time and confirm all the numbers before deciding on the rental transition. Comparing both selling and renting options side by side can also be helpful. Whichever option you choose, keeping a numerical record will allow you to revisit your initial decision criteria later if you have doubts. This article is not investment or legal advice.