Updated about 1 year ago on . Most recent reply
Cash flow vs 50% rule
Hi there. So I have a property that according to the bigger pockets calculators will cash flow $100+ per month but the 50% rule is -901. My question is what do I do with this information. Why is the 50% rule so negative while the cash flow is positive? I need this explained in layman's terms please I am still learning and the math breaks my brain a little, haha. Thanks in advance
Most Popular Reply
#5 All Forums Contributor
- Plymouth, MI
Your mistakes, and the reason why you don't understand why there is a conflict, is because you don't understand the meaning behind these analysis tools. Let me explain:
50% rule = tells you nothing of value, means NOTHING,
1% rule = tells you nothing of value, means nothing
$100+ cash flow/month = means you are making $100/month in CF per month.
Why do you want to invest in RE? Why do you invest in anything? What do you want as an end result? The answer is MONEY. Actual money, measured in dollars.