In 2021, William and Josh Lemmon started buying single-family homes in Akron, OH, for as little as $60,000 and renting them out for as much as $1,000 per month.
“The rents [we could charge compared] to the cost of buying it were insane,” “Landlord Diaries” podcast, understands why the idea took hold.
“Anything that says ‘passive income’ is going to get instant attention because we’re all working so hard and all could use a little bit more to fund things like strategies.
Buy-and-hold investors collected rent while waiting for property values to rise. House hackers rented out part of the home they occupied. The BRRRR method—buy, rehab, rent out, refinance, repeat—promised to recycle capital from one property into the next. And short-term rentals offered the possibility of much higher nightly revenue.
The methods differed, but the underlying proposition was the same: Buy or control a home, use someone else’s housing payment to cover the costs, and build an income stream outside a paycheck.
Then the housing market appeared to confirm the pitch.
Median asking rent for studios through two-bedroom units climbed from $1,451 in 2019 to $1,741 in 2023, a roughly 20% increase mortgage rates fell to historic lows and home prices rose rapidly, allowing investors to benefit from both monthly rent and appreciation
So small investors moved into the market in force. Their purchases climbed from 186,592 homes in 2015 to 344,310 in 2021, before peaking at 363,434 in 2022—nearly double the 2015 total. And their share of all home purchases rose from 3.82% to 6.08% over the same period.
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Even after the broader housing market slowed, small investors continued gaining ground, accounting for 7.10% of all buyers in 2025. But after rising nearly 20% through 2023, national asking rents stopped climbing and began to edge lower, falling to $1,702 by 2025.
Ownership costs, meanwhile, did not follow them down.
The costs that passive income calculations left out
The Lemmon brothers learned that lesson before the broader market turned.
“They became a job right out of the gate,” William says. “That was the start of what I told you—the expectations of how it was going to go passively—and then it did not go that way at all.”
Most of the Lemmons’ first 11 homes dated from roughly 1920 to 1940. Before they could reliably rent them out, the brothers had to address drainage, roofs, plumbing, electrical systems, heating and cooling, trees, flooring, paint, and years of deferred maintenance.
That work demanded their time and attention, while also eroding the other half of the passive income promise: the revenue left after the work was done.
“If I buy a $90,000 property, I don’t rent it [out] that year, and I spend $30,000 renovating it, then get it rented at the end of the year—that’s negative,” William says. “We’ve been negative out the gate.”
“The time in renovation really costs money and costs your time, and then makes it not so passive,” he adds.
And while the rapidly rising rents of the early 2020s promised to close the gap on a short horizon, it’s become harder to absorb as the market has shifted.
“As homeownership has gotten more expensive and rents have softened, the landlord math has gotten less enticing,” says Hannah Jones, senior economist at Realtor.com.
“Rent softness stems largely from growing rental supply, especially in markets that boomed during the [COVID-19] pandemic,” she adds. “At the same time, owners are feeling the squeeze from the cost side—insurance premiums, maintenance labor, materials, and turnover expenses have all been climbing, compressing margins even where rents hold steady.”
The pressure varies by market. In Austin, TX, median rent fell roughly 8% between June 2021 and June 2026 after a construction boom added a wave of new inventory, Jones says.
“That inflow has pushed landlords toward concessions and incentives just to keep units filled,” she says. “Importantly, this is a supply story, not a demand one as Austin isn’t short on renters. It’s flush with new inventory.”
That can leave owners who bought when prices were elevated unable to charge enough rent to cover the mortgage—but also unable to sell without taking a loss
Lyon adds that even a profitable long-term rental may leave owners with little room for error.
“It’s really hard to make significant cash flow—and I’m talking like more than a couple hundred bucks—with a long-term rental,” she says. “If the water heater goes out, you’re back three years of cash flow.”
