50% Rule for Single Family Homes?

[JP Ivey]

This is my first post.

I have been doing a lot of reading over the last several months and am trying to decide what niche I want to become part of.  Here is my question:

Does the 50% rule apply to single family homes?  If so, how are they a good investment at all?  In a decent neighborhood in San Antonio, there is no way I would find a home that met that requirement.  In my head, I feel like single family homes would require less maintenance and effort.  Am I missing something?

Thanks

JP

[Tim Macy]

It depends on the property and what your strategy is.

If you plan on holding it as a life long rental, then yes, you probably need to use the 50% rule.  

If you're buying a home and planning on fixing it up, renting it out for a few years, then selling it and pulling the forced equity out, then you probably don't need to budget as much for capex. You most likely made most of those improvements when you originally rehabbed it and will get rid of it before those cap expenses start coming into play.

The rules are great guidelines, but apply them to whatever your playbook is.  Although you can lower capex based on what your strategy is, don't eliminate it!