What's the 1 percent rule
I've heard a few references to a 1% or 3% rule, and haven't found anything (yet) on the site, detailing what it is, and how I would go about using that metric to size up my investments?
Most Popular Reply
It is referring to the ratio of the purchase price to the monthly rent. For example, if you're going to rent a SFH for $1250 per month, the 1% rule says you shouldn't pay more than $125,000. Many experts still use this as a guide, but others will tell you it's very tough to find those scenarios and it was more common in the 1990s. I try to use it as a guide, but your full financial analysis should tell you to act on a property or not.