Rental 50%-Rule vs 30%-Rule on a SFH

[Eric Gamble]

As an REI that primarily buys in cash, would my opportunities be taken seriously if I used and commuicated my 30%-Rule assumption?

I am looking at wholesaling some properties in a highly desireable area.  However, whenever I do my analysis with the 50%-Rule, I cannot get close to a number that would work for all parties.  If I run the same analysis, using a 30%-Rule, I might get EXTREMELY busy (and that is what I want).

The 50%-Rule is a rule of thumb that says take 1/2 of rental income and allocate it to expenses.  This is a very good practice when the landlord is responsible are ALL utilities and the like.  However, with a single-family home, especially in Class-A/B neighborhoods, the tenant covers all of their utilities and as for insurance the landlord probbaly has an umbrella policy on the property.

Many thanks,

-Eric

[Joe Villeneuve]

You just gave the main reason why both rules are, "porcelain bus" material.  There are different situations and different models for income/outgo, and different markets for cost/rents where an analysis that is as general, and can best be described as using "fudge factors"...then making decisions based on that "fudged analysis", should probably be flushed out from the start.  Just do an accurate and specific analysis from the start.