The 50% Rule

The 50% Rule

Another quick way of evaluating a buy-and-hold for the rental income would be the 50% rule.

The 50% rule states that on average the expenses for a rental property would be about 50% of the rent. This does not include any loan payments for the property.

As a rough estimate your expenses will look something like this:

– 5% on maintenance and repair

– 10% on capital expenditures

– 10% on property management

– 10% on property taxes

– 5% on insurance

– 10% on vacancy and turnovers

It is okay to use an educated estimate on these numbers since over the long-term it tends to even out. So if all your expenses added up to 50% of the possible rent, you would then have the remaining 50% for profit/to pay the mortgage.

Schedule a 15 minute consultation with us to learn more about how you can utilize the 50% rule to help you find your first or next real estate investment.

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