The rent should ABSOLUTELY cover all expenses plus 10-15%+ of all preventative maintenance
Renters are happy to pay this. Why? They can "walk away" anytime (ignore contractual agreement violations).
Discussion
But say you have two identical houses next to each other.
One is paid off, one has a loan.
The rule of thumb is value/10/12. So a $100,000 house should bring $10,000 a year, apex $800 a month.
The house next door with a mortgage, costs $120,000 even though it’s actual value is $100K. Why would anyone pay $1000 to rent there the same house in contrast with $800 the real value?
And you are saying it should make even 10%-15% on top of all that? Something is off here.
In a lot of situations like this, both houses are charging $1200 per month to rent
Correct. Add that additional 10-15% on top of that. Welcome to inflation. Until everything collaspes, which just resets credit market and therefore pushes currency prices even higher ('08)