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Updated 3 months ago on . Most recent reply

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Ginger Vaadi
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Cash flow vs 50% rule

Ginger Vaadi
Posted

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 

  • Ginger Vaadi
  • Most Popular Reply

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    Joe Villeneuve
    #4 All Forums Contributor
    • Plymouth, MI
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    Joe Villeneuve
    #4 All Forums Contributor
    • Plymouth, MI
    Replied

    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.

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