The 50% rule is used as a back of the napkin test to move to the next step in making an Offer or through the due diligence process.

Net result of a back-of-the-napkin calculation:$5,700 pro-forma$2,850 collected$2,736 (lower mortgage payment)------------------$114 cash-flow$13 per door cash-flow per month.88% cash-on-cash return at a 25% down mortgage------------------REAL net result:  my checking accounting has a better cash-on-cash return that .88% so you'd better be in it for building equity :-)

(unless it is the 50% theory, that is pretty accurate, but still a back-of-the-napkin approach)

I am a broker representing myself, as such I can write an offer on a napkin if I want.

I have used spread to track stuff... but for the most part deals can be analyzed on the back of of a napkin.  

Using a back of the napkin analysis, I looked for a cash positive flow and then ask "how much vacancy can I tolerate and still not go negative" - aka break-even point. 

I have even received a contract on a single piece of paper and the assignment of contract on a napkin.

We have had some "back of the napkin" discussions about initial funding.

great idea- you got the wheels turning- but-going into commercial is a little different than the 3/2 flipthat takes bridge money and a strong Performa plus CASH3/2 you can get with a napkin at the black bear restaurant- that was my first deal- 1g down 1g a month with a 5 year term for 110k- sold in 2 at 245kfind yourself a nice little duplex on terms you can afford rent one side out and take out a refi on it that not going to swamp you then maybe a 3 or 4 plex- redo then look into apartments-Good luck!

In the past I've done nothing more than a napkin analysis to figure out cash flow, which has somehow worked.