What is your rule?

[Mike McKinzie]

I am in an unusual position. I have taken over the family trust but it is specifically written that I cannot sell anything until my older sister, who is mentally handicapped, passes away (except if needed to pay taxes).

Therefore, the only way to expand the investment portfolio is to finance some of the properties (21 are free and clear). So bouncing around numbers in my head, I thought that I need to get at least 200% of the mortgage payment in gross rents, ie. If I borrow and have a $3,000 monthly payment, then I need to buy property that will produce $6,000 a month in rent. But using the 50% rule, this is a 'break even' proposition. A real life example: I borrow $559,000 which, at 5%, is a $3,000 a month payment. The property I borrow against rents for $2,600 a month (two on a lot), so I lose $1,700 a month on that property (using the 50% rule). So I use the $559,000 to buy properties that produce $6,000 a a month rent, netting $3,000. Taking the $1,700 loss from the $3,000, leaves me with a net of $1,300 a month. My original net? $1,300 (1/2 of the $2,600). All that work to break even, so why do it? Or did I figure something out wrong?