50% rule ? True or False?

[Jonathan G.]

I’m reading the posts on this website discussing the 50% rule. We own few Class C Apartments Complexes, anywhere between 36 to 100 units. My management Company manages around 2,500 units. I have to say that based on our experience and if you factor all expenses into your spreadsheet you will most likely end up at the 65-70% operating expenses over time. Sometimes even more. Unless you go into a Class B+ or A or 160 units and above maybe, achieving 50% is difficult on Class C unless of course you manage your own building and decide to move over and live in the property….thoughts?

[Jonathan G.]

Here is how we make money – buy at the right time i.e. when market is down and at the right price – so you at least break even with your cash flow. Then, turn it around when market picks up. Currently, we all see increased rent and occupancy so I think it’s a good time for people with rentals. Rental market will only continue to improve with how economy is right now. At least for us, Real estate has never been a cash flow play. It’s the long/short term appreciation or market flips what may turn these investments into winners. Not their ongoing cash flow…