Nearly half of every dollar of rent goes directly to covering the mortgage payments on a rental property, according to a new study from the National Apartment Association (NAA).

The organization’s updated Dollar of Rent analysis, which used the newest data from operating statements for federally mortgaged rental properties, found that 46 cents of every dollar go to mortgage payments, comprising by far the largest allocation for each rental dollar.

Rental housing providers in Colorado (where 56 cents of every dollar go toward a mortgage) and Utah (55 cents) send the largest shares of each dollar of rental income toward their mortgage costs.

Operating expenses, ranging from ongoing maintenance to utilities and insurance, make up the next largest share at 27 cents, on average. Eleven cents out of every dollar go toward property taxes, while employee payrolls account for 7 cents and capital reserves (tucked away for future upgrades and repairs) make up another 2 cents.

Only 7 cents of every dollar are realized as profit by rental housing providers, quashing what the NAA called a common misconception that such entities reap large profit margins.

“Just like every sector of the economy and countless American households, the rental housing industry has grappled with escalating costs in the face of record inflation,” said Bob Pinnegar, NAA president and CEO. “Rental housing is a narrow-margin industry that is often mischaracterized, but the data shows the truth – 93 cents of every rent dollar keep apartments running and support the local community.

“As we continue to contemplate housing affordability challenges, it is vital to keep these necessary expenses in mind,” Pinnegar added.