I finally bought into that viral '1% rule' for real estate investing after ignoring it for 3 years

I always thought the 1% rule (monthly rent should be 1% of purchase price) was just a lazy shortcut from online gurus, but after running my own numbers on a duplex in Phoenix that returned 1.3%, the math actually held up better than my gut feelings. For those who rely on it, what's the worst deal you've seen that still passed the 1% test?

3 comments

3 Comments

wilson.olivia15d ago

Heard this EXACT same story from my friend Sarah last month. She bought this rundown fourplex in Tampa that barely hit 1.1% and thought she was being smart. Turned out the place had knob and tube wiring in two units and a foundation crack that cost her 18 grand to fix before she could even rent the place out. The 1% rule TOTALLY ignored all the capital she had to pour in just to make it livable. She's been holding it for 8 months now and the numbers still don't work because the expenses are way higher than her spreadsheet predicted. That rule is just a starting point but it hides so many problems until you're already in deep.

brooke_taylor4414d ago

Yep, but that rule is just the math before you discover the mold.

corah7514d ago

Our last flip had the same hidden costs, brand new roof needed before we could even list it.