Does the 50% rule exist in Massachusetts?

[Rafael Barbosa]

Is the 50% rule and the 2% rule/test even possible in Massachusetts?

[Bram Spiero]

Where have you been looking? I haven't seen a 2% rule anywhere realistic and have been assuming that to be 1% ages now.

Just for giggles, I analyzed this

property

http://www.trulia.com/property/3229148553-1-Quimby...

rent

https://www.rentometer.com/results/tt_kOY8yPiI

Analysis

Acquisition Cost Breakdown
Purchase Price	$150,000
Downpayment	$30,000
Finance Amount	$120,000
Improvements	$7,000
Closing Costs	$4,500
Total Cost	$161,500
Cash Outlay	$41,500

Financing Details
Downpayment	20.00%
Interest Rate % (anual)	4.50%
Closing cost %	3.00%
Loan Period (years)	30
Monthly Mortage Payments	$608

		Monthly	Annual		Monthly	Annual
Revenues		conservative	optimistic
Gross Scheduled Income		1,200	$14,400		$1,500	$18,000
Vacancy Rate (% Rent)	10.00%	120	$1,440	8.30%	$125	$1,494
Net Scheduled Income		1,080	$12,960		$1,376	$16,506
Other Income		0	$0		$0	$0
Gross Operating Income		1,080	$12,960		$1,376	$16,506
Operating Expenses
Propperty Taxes (annual)		$148	$1,776		$148	$1,776
Insurance (annual)		$37	$444		$37	$444
Property Mgmt (% Rent)	10.00%	$120	$1,440	8.00%	$120	$1,440
Repairs (annual)	10.00%	$120	$1,440	5.00%	$75	$900
CapEx (annual)	5.00%	$60	$720	2.50%	$38	$450
HOA (annual)		$0	$0		$0	$0
Utilities (annual)		$0	$0		$0	$0
Landscaping/snow (monthly)		$0	$0		$0	$0
Other 1 (annual)		$0	$0		$0	$0
Other 2 (monthly)		$0	$0		$0	$0
Total Operating Expenses		$485	$5,820		$418	$5,010

		con	opt
1% rule		0.80%	1.00%
50% rule		44.91%	30.35%
NOI		$7,140	$11,496
Cash Flow annual		-$156	$4,200
Cash Flow monthly		-$13	$350
Cap Rate		5%	8%
CoC		0%	10%

Not to say that I would touch this property as it doesn't cash flow with my conservative criteria, but both conservative and optimistic criteria are showing this falling within the 50% rule and under the optimistic scenario (which isn't complete fantasy) the place cash flows.