I want to make sure I completely understand this 50% rule..

[Scott E.]

Hi all,

I have found a duplex that I am prepared to make an offer on. It seems that the #s fit within the rule, but just wanted to make certain. If you guys could maybe take a look at these #s, and also suggest other items that I should be looking at/considering, it would be greatly appreciated.

Preface: The property is a good condition, well maintained, block construction duplex in a VERY rentable neighborhood (walking distance from the state university)

Asking price: $98,000
Units: 2 2br/1bth's
Avg rents for 2br in neighborhood: $700-$750
Property taxes: (annually) $1070
Estimated insurance: (annually) $1000

At full asking price, my PITI/PMI would be apprx $719 per month, depending on the rate (this is with 3.5% down on an FHA loan)

According to the listing, the tenant pays electric, water, sewage, trash. Landlord is only responsible for landscaping.

BTW: I would be living in one of the units myself for the next 6-12 months, so I also would be getting the full interest tax deduction (This will be my first RE purchase)

So this seems to fit the 50% rule, but I know there ARE other expenses.. i.e. property management, landscaping, regular maintanence, vacancies, evictions, etc.

Do these #s seem to make sense? The market out here is VERY aggressive. I've lost out to cash buyers several times already. My realtor is suggesting I offer OVER asking price.

Thoughts?

Thank you,

Scott