I will be doing my first tax return with rental property. Here is a typical example in my area:
Purchase price: 500k
Land value: 200k
Monthly depreciation: ((500k-200k)/(27.5x12)=0.91k
Monthly rent: 3k
It would be hard to come up with another $2.1k depreciation for this one house each month to offset the difference. A $400k (80% of purchase price) 30yr loan at 4% has a monthly interest cost of ~$1300. Other costs that I can think of are: property tax $400/month, monthly HOA ~$100, monthly insurance ~$100, mothly repair/landscape ~$100 ...what else can we come up with? Then the gain is about zero.
However, if 1% rule is followed, (i.e. good deal) the purchase price would be only $300k and the depreciation will be significantly less thus sizable gain for each house.
