AI says 8% rental yield. Why is the owner still paying?

An AI report says this property earns eight percent a year. So why are you putting money into it every month?

Imagine a home costs three hundred thousand dollars. It could rent for two thousand a month.

Twelve months gives twenty-four thousand dollars. Divide that by the price, and you get eight percent.

That's called gross rental yield: rent compared with the property's price, before costs. It is not money you get to keep.

Now, one month passes without a tenant. Two thousand dollars disappears from the expected rent.

Property taxes, insurance, repairs and management cost another seven thousand over the year.

You have fifteen thousand left. But your loan payments are eighteen thousand.

You need three thousand from your own pocket. That's two hundred and fifty dollars a month, on average.

Some loan payments repay what you borrowed, building your ownership. So this is a cash shortfall, not the whole investment's profit or loss.

The eight percent calculation wasn't wrong. It just answered a smaller question than you thought.

AI can help analyse the deal. But check whether its rent is realistic, which costs it includes, and what happens when the home sits empty.

Before trusting the headline, ask: what comes in, what goes out, and what's left after the loan?

Eight percent of what, before which costs?