Is 80% ratio between expenses and rent too high ?

[Navin Kumar]

Hello,

I've a deal that came across my table for which the expenses are 80% of the annual rent. What is the recommendation as per the 50% rule ? Should I avoid deals that have too high ratio of expenses and rent ?

Please advise.

Thanks,

Navin

[Zach Quick]

@Jeff B. Aha, that would make more sense if you didn't allocate CapEx for future within rents collected.

I would say most wouldn't have proper reserves when purchased. Of course, every detail counts so it makes it an imperfect science.  I like to update mine from the get go but still allocate future rents, to each their own of course.