50% Rule Calculator

The 50% rule estimates that approximately half of gross rental income goes to operating expenses (excluding mortgage). It provides quick NOI estimation without detailed expense analysis.

This calculator applies the 50% rule to your gross rent, estimating operating expenses and NOI. It's useful for quick property screening before detailed financial analysis.

The 50% rule is an approximation. Actual expense ratios vary: newer properties might run 35-40%; older properties or those with included utilities might exceed 50%. Always verify with actual data before investing.

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How to Use This Calculator

1 Enter the gross monthly rent
2 Click Calculate to estimate expenses and NOI
3 Use estimates for quick property screening
4 Always verify with actual expense data before buying

Formula

Estimated Expenses = Gross Rent × 50%
Estimated NOI = Gross Rent - Expenses

Example Calculation

Quick analysis of property renting for $2,000/month

Inputs:

Monthly Rent: $2,000

Result:

Estimated expenses: $1,000/month. Estimated NOI: $1,000/month ($12,000/year)

Pro Tips

50% is an estimate, not exact
Newer properties often run lower
Older properties may exceed 50%

Important Considerations

• Tenant-paid utilities reduce actual expense ratio
• Self-management eliminates 8-10% management fee
• New construction typically has lower maintenance costs initially

Frequently Asked Questions

The 50% rule estimates that half of gross rental income goes to operating expenses (excluding mortgage). It provides a quick NOI estimate without detailed expense analysis. Subtract mortgage from the remaining 50% for cash flow.

It's a reasonable estimate for typical properties. Newer buildings may run 35-40% expenses; older properties or those with included utilities might hit 55-60%. Always verify with actual numbers before purchasing.

The 50% includes: property taxes, insurance, maintenance, repairs, vacancy, property management, capital reserves, and other operating costs. It does NOT include mortgage payments—subtract those from the remaining 50%.

Take monthly rent, divide by 2 for estimated NOI, then subtract mortgage payment. If the result is positive, the property may cash flow. Example: $2,000 rent × 50% = $1,000 NOI - $800 mortgage = $200 cash flow.