50% rule

[Alberto Urena]

guys I'm a little confused with the 50% for exemple on this deal according to the 50% rule what'd be the cash flow price 410,000 

Principal & Int.

$1,468

Taxes + HOA dues. $384

Homeowners Ins   $70

Income 5000 

I know have to do a better analysis to buy buy a property but I'm just wondering with the 50 % rule what are the results I'm just confused with the taxes and insurance. 

[Nick B.]

IMHO, this rule does more harm than good. Expenses do not depend on rents. They are what they are. Instead of 50% use average expense per unit numbers for a given property type, class, and location. E.g., a C class apartment may cost $4500-$5000 per year in DFW, TX. However, keep in mind that this is just a ball park estimate. You still need to do a more detailed projections for a specific property.