Full Article: https://retipster.com/terms/50-rule?utm_source=youtube&utm_medium=social&utm_campaign=terms&utm_content=BUTAlnEpSTk The 50% Rule is a guideline that assumes operating expenses should equal roughly 50% of the gross income for a rental property. The 50% Rule is a commonly used analysis tool that allows a real estate investor to quickly access whether or not a property generates adequate cash flow. If a property passes the 50% Rule, it merits further due diligence and investigation as a potentially viable investment property – however, the 50% Rule by itself does not guarantee that a property is worth purchasing. The 50% Rule is more of a pre-screening metric used to sift through many properties and highlight the ones with the most potential. Remember that the 50% Rule does not include debt service, HOA fees, and property management costs. The 50% Rule is very simple: Gross Income x 0.50 = Expenses Suppose there is a duplex listed for sale for $200,000. Each unit rents for $1,000 per month, making the gross income $2,000 per month. The 50% Rule would have you assume that 50% of the monthly income (in our case, $1,000) will be necessary to cover all monthly expenses outside of debt service, HOA fees, or property management costs. Join Our Community! REtipster Forum: https://retipster.com/forum REtipster Facebook Group: https://retipster.com/facebookgroup Follow Along! YouTube: https://retipster.com/youtube Facebook: https://retipster.com/facebook Instagram: https://retipster.com/instagram Twitter: https://retipster.com/twitter Pinterest: https://retipster.com/pinterest LinkedIn: https://retipster.com/linkedin TikTok: https://retipster.com/tiktok