Is 50% Rule (Guideline) still relevant in your market

[Robert M.]

Hi Everyone....Tax season is great to reflect and really dig into your numbers!  I have found that my expenses are creeping up year on year and revenues remain relatively flat.  Atlanta Market

Property taxes have doubled for me over past 2 years so I think this is primary cause.   I am now considering 60% as a guideline not 50% when evaluating properties.

Thoughts?

[Steve Olafson]

The 50% rule is non-sense.  Every area has different levels of income and expenses.  You might get lucky if you use this tool and happen to live in an area with that matches but the odds are that you don't.

Some places rent for $2000 per month.  Other places rent for $500.  You could live in an area of high insurance and taxes or low insurance and taxes.

You could also own a property that has high turnover.  Or, you could be in an area that people rarely move from.  This all has an affect on expenses and needs to be factored in.

The 50% rule never made sense.