trying to find properties that meet the 50:1 rule

[William Howley]

Hi, on a lot of these posts / podcasts investors say the same thing, for every 50k in purchase power try and get $1000 / month in rental income. I am having a hard time finding deals like this in the Hillsborough, FL / Pinellas, FL area. Everything that I am finding whether it be MLS, wholesaler or any other means does not meet these criteria. Does anyone here know of how to find deals like that?

[Colin G Murphy]

Hi @William Howley

I wouldn´t place too much importance on rules of thumb such as the 50% rule or 2% rule. They are mostly meaningless and shouldn´t form an important part of your property sourcing metrics. I would also agree with @Jay Hinrichsthat they apply even less in a healthy recovering market like Tampa. 

Wherever you choose to invest, you need to do some proper research and get a very solid handle on the typical fixed and variable costs for landlords in that area. Trying to estimate the profitability of a rental in Tampa Bay (or anywhere else) by deducting a fixed percentage of the gross rents or the gross purchase price is just not going to work. You need the real numbers and you need to put them into a spreadsheet. There are some free calculators on the BP site which is a good place to start.

Most importantly, you need practice. Start analysing at least 5 deals per day (tweaking your spreadsheet as you go along) and when you get to 100 deals analysed you will be far further along the road than you are now.