The 50% rule and down-payment size

[Ryan Fox]

Looking to purchase our first single-family home out of state (timeline about 12 months). We want to be conservative so we have been using the 50% rule to practice analyzing various properties. We're finding it very difficult to find deals that work using the 50% rule with a 20% down payment. For a long time my wife has suggested putting 30% down to give us more "cushion" but it almost feels like that is a way to fudge the numbers on the 50% rule. Perhaps we should not be so "hard and fast" with that rule, but we want to be conservative since our 1st experience may determine our future investments.

Thoughts on putting a larger down-payment to give more "cushion?" 

[Jeff S.]

Yes, all expenses and reserves.This has been tested on thousands of apartments and this is an average of a really big number. The plan is to beat the 50% for all expenses and reserves.