50% Rule incl. Prop. Tax & PMI?

[Account Closed]

Does the 50% of expenses incl. Prop. Tax & PMI? Here's my situation and whether or not I include it in my evaluation.

Example: duplex (2 units) 100k financed; no rehab necessary; "as-is"

Gross rents: $1,730

50% exp. ($865)

NOI: $865

Princ. & Int.: ($665) (30/yr @ 7%)

PMI: ($41) (@ .5% in CA)

Prop. Tax: ($125) (@ 1.5% in CA)

Cash flow: $34 divided by 2 units= ($17/unit which is not my standards)

On the flip side of the original question, if you leave out Prop. Tax and PMI, you then have a cash flow of $200 leaving $100/unit which now meets my minimum standard.

so...how does PMI and Prop. Tax play into this? I need to know so I make sure I am uniform in my evaluations and analysis from one deal to the next another.

To further check my numbers against the 2% rule,
my gross rents/value falls at .0173%... just shy of 2%.

To fully meet 2% with the given gross rents, I would have only offered $86,500.

Would you do this deal or not?

Thanks!