50% rule

[Jill Herges]

Just want to make sure I understand the 50% rule correctly...this includes all expenses (maintenance, repairs, vacancy, insurance, taxes, CapEx, management) except for mortgage payments??

Example:

purchase price =  199,000

monthly gross rents =  2655

50% of 2655 = 1327

Mortgage payment= 805

1327-805 = 522 estimated cash flow monthly

Cap rate 7.9%

With 50,000 down, that gives me a cash on cash return of 12.5%

I realize the 50% rule is a very basic estimate any many things can alter this, but do my numbers seem correct?

Any input is appreciated!