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,” William tells Realtor.com®. “So we jumped in on it.”
It was the height of the passive income craze—a personal finance trend built around the promise that the right investment could generate returns with little ongoing labor. Podcasts, YouTube channels, and real estate platforms helped turn that idea into a phenomenon, teaching aspiring investors how to buy rentals, finance renovations, and use tenants’ payments to build wealth.
The Lemmon brothers had wanted to get into real estate for years, but they were also paying attention to the advice surrounding them.
“Me and my brother both, we’re pretty big on watching some people’s YouTube videos,” William says. “That’s all they do is talk about investing and single-family homes and loans and insurance.”
At the time, the market made the promise hard to resist. Mortgage rates were low, rents were skyrocketing, and there were still affordable homes to be found in markets such as Akron.
But just five years later, those tailwinds have faded. Rents have softened, operating costs have climbed, and the investment many buyers expected to produce spendable income has delivered something else: money locked in equity and a workload that resembles a second business.
Why rental properties became the face of passive Income
Katie Lyon, a rental property owner, real estate investor, and host of the “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 retirement or trips or sending kids to college,” she says.
In the early 2020s, rental property appeared to offer an unusually direct route to that goal.
Search interest in “passive income with real estate” nearly quadrupled between 2019 and 2022, according to a Realtor.com analysis of Google Trends data, while interest in “how to buy a rental property” nearly doubled.
Online investing communities translated that growing appetite into a menu of 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, according to Realtor.com data. Meanwhile, 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.
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, according to Jones.
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.”
When the easy math broke, investors changed their models
Despite those challenges, Lyon and the Lemmon brothers are still in the rental business—just a little more actively.
Lyon says her family’s long-term rental produced only “a couple hundred bucks a month.” Short-term rentals can make substantially more—but she estimates the workload can be “five, six, seven times more.”
She’s shifted toward midterm furnished rentals, trading some of the potential revenue of nightly stays for fewer turnovers and a more manageable workload. Her tenants include traveling nurses, corporate workers, and construction crews who need housing for months rather than days.
“It’s forced creativity,” Lyon says. “Some markets are just really, really tough right now with the numbers.”
The Lemmon brothers changed course, too. After finding their lowest-cost properties harder to renovate and rent out, they began buying in stronger neighborhoods. They now seek deeply discounted deals where renovations can create enough equity to justify the expense.
What’s striking is that neither path produces the kind of flashy formula that made “passive income” so seductive. The Lemmons and Lyon have had to adapt to the realities of their markets, their capital, and the amount of work they can sustain. It is far less glamorous advice—but also far more honest.
Jones says whether owners should wait for conditions to improve depends on what is squeezing the property.
“If it’s cyclical oversupply, like Austin, waiting for demand to catch up to new construction may pay off,” she says. “If it’s structural, like Florida‘s insurance and reserve mandates, there’s no cycle to wait out and the costs aren’t temporary.
“None of this means buying rental property was necessarily the wrong move,” Jones adds. “It just means the income from it was never as hands-off, or as protected from rising costs, as many owners expected going in.”
The Lemmons’ portfolio is building wealth, but primarily through equity—not spendable monthly income.
“We don’t take anything out of it,” William says. “The money made off this is the equity in the renovations.”
For many long-term owners, Lyon says, this is the more realistic goal: Break even while retaining the property for appreciation, tax advantages, retirement, or future equity.
“Find your spot on kind of the alignment of effort and cash flow and appreciation,” she says.
The brothers still believe their portfolio will eventually provide substantial income. But they no longer expect it to happen quickly.
“It’s work and it’s expensive, and it’s a real long-term payoff,” according to William. “On paper: You buy it, you rent it [out], it’s money. But it doesn’t work like that.”
