Math Check Please

[Carraig Stanwyck]

Hi,

Been lurking for a while and reading everything I could. Initially when I read about the 50% rule I thought that my two rentals were bad deals, however for some reason I completely missed that escrow is part of the 50% expenses until @Jon Holdman mentioned it in another thread I read today.

That puts a different spin on things and I'd love confirmation that my math is right. First though, my rentals were not bought as rentals. Rather, they are my first home and my wife's first home. I know now to look for better deals.

House #1
Rent-$1400
Payment-$922
...of which $350 is escrow
So $1400 minus $700 (50% expenses) minus $572 (mortgage payment not including escrow) equals positive cash flow of $128.

House #2
Rent-$750
Payment-$665
...of which $330 is escrow
So $750 minus $375 (50% expenses) minus $335 (mortgage payment not including escrow) equals positive cash flow of $40. However the formula doesn't work for this one because with property management, that and the escrow eat up over 50% of the rent by themselves which leaves nothing for maintenance. This is the house we plan to get rid of in a year or two. Taxes are much higher in area of House #2 hence the higher escrow.

Am I doing the math right?

Thanks,
Carraig