Does the 50% rule work?

[Jill Herges]

I am just wondering if the 50% rule actually works?  If I factor in actual expenses and use 10% each for repairs/maintenance, management, vacancy and Cap Ex that gives me 40% of rents right there.  No way I can pay taxes and insurance for another 10% combined in my area (taxes are high).   I am wondering if I am figuring too high by using 10% each?  I have been looking at possible deals every day and I can't make any of them cash flow by using those percentages.

[David Faulkner]

Forget the percentages. Learn how to do grass roots estimates from the ground up. When the roof goes bad, it costs what it costs to replace ... doesn't matter if it is a $50k house or a an identical $500k house in a different market ... doesn't matter if the rent is $600/mo or $3000/mo. The roof does not know nor does it care how much the rent is ... same for a vast majority of other expenses. Rents and expenses are not directly correlated, and any attempt to artificially correlate them through percentages is mental laziness that will result in inaccurate estimates.