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Updated over 4 years ago on . Most recent reply
What to include in 50% costs & can you charge double mortgage?
So I may be confused on the 50% rule because it just might not work for mid-priced properties in the Las Vegas market or I might be misunderstanding the concept. For example, mortgage/HOA/insurance/taxes on an average mid range house in a B neighborhood are likely to run 1000 to 1800 a month, but double that amount is likely above market for house rentals.
If HOA/insurance/taxes should be included on the expenses part of the equation, double just the mortgage would still be high rent and I can't figure out what folks would be spending big on for maintenance of a property which is not super old or in need of major rehab. I get that sometimes AC breaks or one needs a new water heater, but I'm having trouble getting to any high number for expenses.
I know my local markets extremely well, in terms of changing demographics of renters and what people are comfortable paying and what is available for purchase or rent, but I'm struggling with what should be on my spreadsheet and would love advice on what I'm not thinking of. Thanks!
Most Popular Reply

Keep in mind the mortgage payment includes principal, interest, taxes and insurance. Taxes and insurance are part of the expenses included in the 50% rule. You will want to subtract that portion out of the mortgage payment.
I have found the 50% rule works better for multifamily. With my single family homes, my expense ratio is lower. Like any rule of thumb, it is not precise.