50% Rule and $100 Cash Flow

[Craig Osterloh]

I guess my question is how accurate do you find the 50% expense rule?

If you gross rents are $2500, a margin of error of 10% on your expenses would result in a $125 difference in cash flow. This might result accepting poor deals or rejecting good ones.

So in the end, the accuracy of the 50% number is critical, isn't it?

[Richard Warren]

The 50% rule is not an excuse to avoid doing your homework. It is a guide that can help you to evaluate a deal quickly. If it makes sense on the surface then you need to take a closer look at the actual numbers. The 50% rule is simply based on averages.

:cool: