Should I assume 50% for rental expenses when analyzing a deal?

[Tim Schroeder]

Many REI calculators use 50% for expenses for Rental Property analysis. Should I stick with that when analyzing deals or try to be more accurate by breaking it all down? In other words, is the effort involved worth the added accuracy? Or is 50% a pretty good estimate? It feels high, but then again I am new at this and have nothing on which to base that. Same for closing costs - I tend to see 3% used a lot.

[Thomas S.]

It is also extremely important to understand that expenses are not only about yesterday and today. The 50% guide line is a number projected forward for the life of the property.

The biggest mistake investors make is in assuming a new build or fully renovated property has lower expenses. That would only be the case if they did not intend to hold long term.