50% rule with turn key property

[Corby Alaniz]

I'm looking to purchase a townhome in Mesa, AZ (85205) for my personal residence for a year or two then moving out to a bigger home in order to rent the townhome out. I'll be using the VA loan so it will be no money down outside of closing costs.

I'm not sure how to analyze a deal that I will be living in with the intent to rent in the future. I understand the basics like buying at a discount and the 50% rule but how do they fit into buying a turn key property that I intend to occupy? It seems that they don't. Also, how do I factor the HOA with the 50% rule?

I'm also not exactly sure on how to study the market rents. I've been crusing the listings online but there seems to be a wide range. 

I'm pre-qualified for 135k which only puts me in the range of townhomes or condos and not SFRs.

This will be my first deal but I want to do it right. Any advice would be appreciated. 

[Richard Warner]

Welcome Corby! I want to stress that the 50% rule is a very quick and basic napkin analysis, and would not base your buying decision with this method. 

You need to complete a full detailed analysis to see what your real world numbers would be.

Here is a link to the bigger pockets buy and hold calculator, a great tool that should help you

https://www.biggerpockets.com/buy-and-hold-calculator

As for your rent, we are a property managers our here in Portland, Oregon and our software has a pretty neat tool that shows the actual rental rates of comparable homes nearest to yours. PM me the address and I'd be glad to send you one.

I would also recommend contacting you local management companies for information on your rents. 

Hopefully others will chime in and help you with the rest of your question! Good luck my friend!

Be Great!