Clarity on the 50% rule for Rental Properties

[Jerry Limon]

Hello All,

I was hoping to see if I could obtain some clarity on the 50% (60%) rule. I know that the 50% rule states that 50% of your rental income will go towards your expenses and then you would subtract your mortgage to find out what your monthly cash flow would be (if thats not correct, please feel free to correct me).

In addition, when subtracting the “mortgage” does that variable literally only mean the mortgage payment, or should we also include the utilities, interest on the loan and property taxes?

Im asking as I am realizing that of I were to include these additional expenses, it would make a tremendous difference in regards to my monthly cash flow.

Thank you for your input!

Jerry Limon

[Joe Villeneuve]

...or, you can just calculate it all with real numbers. Not that hard