50 Percent Rule Calculator

How it is calculated

The tool assumes that operating costs always equal half of the rent, with no other adjustment: estimated expenses = monthly_rent × 0.5, NOI = monthly_rent − estimated expenses (net operating income, per month), annual NOI = NOI × 12 and cash flow = NOI − monthly_mortgage. The mortgage figure should be principal and interest only, because taxes and insurance are already inside the 50%. Both inputs are monthly amounts in one currency and cannot be negative. The result can be negative, which means the rent does not cover the loan after the assumed costs. The 50% is a fixed assumption, not your real expense ratio, so treat it as a screening estimate.

Common mistakes

• Adding the mortgage to the expenses. The rule already excludes loan payments from the 50%; they are subtracted afterwards to get cash flow.
• Entering a mortgage payment that includes taxes and insurance (escrow). Those are inside the 50% already, so they would be counted twice and cash flow would look worse than it is.
• Using annual rent in the monthly field. Every input and the cash flow result are monthly; only the annual NOI line is yearly.
• Treating 50% as a measured number. A new building with low upkeep may run far below it and an old one far above, so replace the screen with real expense figures before buying.
• Entering rent at 100% occupancy. Vacancy is part of the 50% assumption, so use the full scheduled rent, not the rent after vacancy.