50% rule flaw - missing out on deals

[Garmeon Y.]

How much further would you look into a deal before passing? What if a prospective deal is slightly negative cash flow using the 50% rule, but might actually be positive using actual numbers? What's the risk of passing on deals that may be profitable using this rule-of-thumb?

[Joe Villeneuve]

I wouldn't use any of the % Rules.  They all do exactly as you say, and they don't do what they are supposed to do.  Nobody buys anything in %, the do in "actual" dollars.

Also, the % rules come from the "paper" market (interpret that as you want), and shouldn't be brought into the REI world. Here's why. When you invest in stocks, you are spending money, as in one use only, and the % rules tell you how much time it will take until you will get your "cost" back.

In REI, the only % rule I use is CoCReturn. In REI, you shouldn't be "spending" you cash, you should be "using" it...as in multiple uses per year. So, the only rule that makes sense, I mean dollars, is the one rule that tells me how hard my "cash" is working for me.