A couple of points others did not bring up or dwell on:
- Your estimate of maintenance seems very low to me. I own a rental property which I bought for 80-something thousands dollars, and while I don't have the numbers in front of me I think maintenance is probably averaging more like $4,000 per year. And that's with me doing perhaps a third of the maintenance myself, so I'm paying for materials but not labor. (I live about a 3-hour drive from the property, so I only go down there to do work if it's a big job. For little stuff, I call a local plumber/electrician/whatever. And of course I have to call someone for jobs that I'm not qualified to do, etc.)
A couple of things to keep in mind: Sure, many months the maintenance will be $0. But every now and then you will have a big maintenance bill. A few months ago the main water line to my rental property broke, and replacing it cost $3,000. That required digging up the front yard with a back hoe, something I was not going to do myself. A few months before that I had to replace a door: $500. Etc.
You can get bogged down with trivial things from your tenants. I had a new tenant move in and complain that the water heater wasn't working. I sent a plumber to check on it. The knob on the water heat was set to "low", all he had to do was turn the knob. Bill to me: $95. I don't blame the plumber: he had to drive out there, figure out that that was all the problem was, and drive back.
If you're comparing to what you spend maintaining your own house, remember, tenants don't worry as much about taking good care of the place as someone who owns it. Because they don't own it. Who cares? If they abuse something and it wears out or breaks, they call the landlord to fix it.
- Maybe you realize this, but cash flow is not the same as profit. If you're paying a mortgage on the property, some portion of that mortgage is paying off the principle. You have to pay that money so it's negative cash flow, but you're exchanging one asset -- cash -- for another -- equity in the property -- so that should be net zero on your balance sheet.
BTW Hopefully the property will appreciate over time, but in the present market, I wouldn't count on it. Value of my rental property is less than it was when I bought it 14 years ago.
Also, the real question is comparing the profit on the property to what you could make if you invested the money elsewhere. Forgetting a mortgage for the moment, if you spent $100,000 cash to buy a property and had a net profit of $2,000 per year, plus appreciation of $1,00 per year, that's 3% profit. If you instead bought $100,000 worth of stock, would you likely make more than 3%? My numbers are just made up, but that's the relevant calculation.
- Tenants don't always pay the rent. When I was a tenant, I had this silly idea that rent was mandatory. Many of my tenants apparently see rent as something to pay if they can't think of anything else they'd rather do with the money this month. Sure, you can evict a tenant for not paying the rent. I don't know what the laws are in New York, but in Ohio, where my rental property is, you can theoretically kick a tenant out with 3 days notice. But if they don't leave, you have to take them to court. Getting a court date takes a month or two. Then assuming you win in court, it's another month or so before the police actually show up to kick them out. So from the day you decide you have to evict a tenant until the day you can actually force them to leave the property is like 3 months. In that time of course they are not going to pay the rent, because why should they? They know they're being kicked out. They also may decide to trash the place, either because they're mad at you for kicking them out, or because they just don't care. They can steal everything that isn't bolted to the floor.
I had a tenant who did $10,000 worth of damage, plus they stole the refrigerator, the oven, and the water softener. Sure, I sued them and won. (A default judgment -- they didn't bother to show up to court to defend themselves.) But they don't have any money, and they have never given me a dime of that. I could try to hound them for the rest of their lives, but that would require hiring lawyers and private investigators, and it would probably cost me more than I would ever collect.