@Nicole Heasley Beitenman
Let me give you the reason for my question. I currently own a duplex that has proven to be a great investment; yet, it doesn’t hold up to the 50% rule. However, like @Todd Dexheimer mentioned, this all dependents on your market. My market is Miami Florida. Here are the numbers, so you can see what I mean.
The numbers are the following:
| 359,900.00 | sales price (purchased Dec 2015) |
| 89,975.00 | down payment (25%) |
| 10,000.00 | closing cost (estimate - I don’t remember the exact figure) |
| 7,000.00 | required rehab (estimate - I don’t remember the exact figure) |
| 106,975.00 | Cash invested |
| 3,900.00 | Rental Income (actual figures) |
| 150.00 | Parking Income (actual figures) |
| 4,050.00 | Total Inflows |
| (400.00) | Utilities |
| (250.00) | repair budget (not an actual outflow, yet) |
| (2,200.00) | Mortgage (Includes insurance, taxes, and P&I) |
| 1,200.00 | Operating Inflows |
| 14,400.00 | Yearly inflow |
| 13.46% | ROI |
If I were to use the 50% rule I would have discarded the property. However I get a very nice cash flow on top of that the property appraised for 475k a few months ago. That's over 30% capital appreciation. My point is that perhabs the 50% rule is a good rule of thumb, but in my opinion it cant be a deal breaker.
What are your thoughts?
