Updated almost 7 years ago on . Most recent reply
50% rule
noob here.....Can someone explain the 50% rule, 2.5% rule.....I can't seem to find a definition for it.
Thanks.
Jim
Most Popular Reply
Timothy W.
#3 Off Topic Contributor
#3 Off Topic Contributor
- Attorney
- Viera, FL
50% of what you hear about real estate investing is crap.
Of that 50%, only 2.5% works in a down market.
Seriously, here's what it means. If you buy right - at least 50% of your rental income will be spent on expenses. The general guideline is that you want to get rental income that is at least 2% of the purchase price. I used to believe in 1% but 2% is certainly better....and 2.5% is even better than that. With REOs the way they are, I've been applying the 4-5% rule. :mrgreen: