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Updated over 10 years ago on . Most recent reply

User Stats

120
Posts
96
Votes
Craig Shute
  • Landlord
  • Syracuse, NY
96
Votes |
120
Posts

Modified 50% Rule

Craig Shute
  • Landlord
  • Syracuse, NY
Posted

I try to share things I figure out as I figure them out in case they might help someone else.  
The 50% rule is popular and of course everyone adds the disclaimer that it isn't the end-all be-all.  I live in a high-property tax area (Upstate NY), and I was finding when I independently ran the numbers, 50% was not at all accurate.  I found another quick way of doing it:

25% of gross rent for vacancy, repairs, and reserves (you can use this rule because these are just allowances, not measured expenses)

Plus $50 per month for insurance (on SFR)

Plus the taxes from the county website (Make sure to add town/county, city/village, AND school; zillow is almost always missing one portion; also be sure to remove any exemptions an owner-occupant currently gets)

That tells me what my cash flow will be before financing.  Might work for other people in high-tax areas.  Have a great day!

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