Rental Property Expense Calculator
Calculate total annual operating expenses for a rental property. Estimate taxes, insurance, management, and maintenance as percentages of property value.
The 50% Rule and Real Rental Expenses
Experienced real estate investors use the 50% rule as a quick underwriting heuristic: operating expenses typically consume about 50% of gross rental income. On a $2,700/month rental, budget $1,350/month ($16,200/year) for operating expenses before you even touch the mortgage payment. This rule accounts for taxes, insurance, management, maintenance, vacancy reserves, and capital expenditure reserves all together.
The 50% rule is a starting point, not a ceiling. Newer properties in low-tax states with self-management might run 35-40%. Older properties in high-tax states with professional management might run 55-65%. Use this calculator to model your specific situation, then compare the resulting expense ratio against the 50% rule to see whether your property is positioned favorably or unfavorably relative to the average.