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Updated almost 12 years ago on . Most recent reply
Basic question about how to calculate 50% rule
Hi Everybody, when you run the 50% rule..... do you include tax payments in your equation? Right, I'm guessing that is a yes.... so 50% of your total rent income needs to cover principal, interest and taxes?
I was watching a video and thought I saw that property taxes were excluded for the 50% equation but I don't understand why or if that is the way investors do it.
Thanks!
Most Popular Reply

No. The 50% includes taxe, insurance, vacancy, maintenance, capital, etc. From the remaining 50% you have to pay your P&I payment. That's all. Whatever is left (hopefully a meaningful amount) is your cash flow.