Updated over 6 years ago on . Most recent reply
Properties that are under the 1% Rule
I am finding that I am often coming across properties that are just below the 1% rule, about .9%. Granted, this does not include any negotiations, considerations of work that needs to be put it, etc. But does being below the 1% rule automatically rule out a property for you? Or are there exceptions that will lead you to throw the 1% Rule out the window? Thanks in advance for your feedback!
Most Popular Reply
The 1% rule is only a rule of thumb. I never use it to calculate whether an investment is worth it. For beginners its a way to start analyzing.
When you run numbers and the property cash flows decent you will find you will be near the 1% rule. It should not be your only metric. If a property cash flows $500 per month and does not meet the 1% rule who cares. Its a good investment. If you have no money stuck in the project and cash flows $300, who cares about 1%. Base your numbers on factual data you will be way better off.
If you are following the BRRRR strategy and are able to have no money stuck in you have infinity ROI. 1% doesn't matter. There are many rules of them, but real numbers are what counts.
Good Luck.