Is there any city can meet 1% rule now?

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Is there any city can meet 1% rule now?

Judy Wang
Member since 2021 · 27 posts · 11 votes

Hi BP community,

I am looking for property investment opportunities that can meet 1% rule. Based on my conversations with several agents in TX, FL and CA, the housing markets there are very crazy. Hardly can find 1% rental houses, and meet 0.5% might be the best. I am wondering, given current low interest rate and very hot housing market, is there any city can meet 1% rule?

Any advices and opinions are welcome! Very glad to join this community and share ideas with you!

Thanks!

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Lane Kawaoka
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
5y

Birmingham, Atlanta, Indianapolis, St Louis, Kansas City, Memphis, Little Rock, Indianapolis, Greenville, Jacksonville, Tampa, Houston, San Antonio, Little Rock, Milwaukee, Cincinnati, Dayton, Cleveland, Ohio, or other secondary or tertiary markets.

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  • Jefferson Simmons
    Realtor · Manhattan, KS · Member since 2021 · 62 posts · 54 votes
    5y

    Hi Wang! I am located in Manhattan, KS. A triplex came across my desk today for $210,000 that is rented for $2,100 through June 2022. 1% rule exactly!

    0Reply
  • Judy Wang
    OP
    Member since 2021 · 27 posts · 11 votes
    5y
    Originally posted by @Jefferson Simmons:

    Hi Wang! I am located in Manhattan, KS. A triplex came across my desk today for $210,000 that is rented for $2,100 through June 2022. 1% rule exactly!

    Thanks Jefferson for sharing the experience. I would love to talk to you for further info. Could you send me your email? 

    0Reply
  • Polo VazquezPro Member
    Real Estate Agent · McAllen, TX · Member since 2017 · 382 posts · 281 votes
    5y

    I know a place! Are you looking to do out of state investing? DM and I'll give you more details

    0Reply
  • Judy Wang
    OP
    Member since 2021 · 27 posts · 11 votes
    5y
    Originally posted by @Polo Vazquez:

    I know a place! Are you looking to do out of state investing? DM and I'll give you more details

    Hi Polo, yes, i am looking for out-of-state investment opportunities. I have connected with you. New to BP forum and don't know how to use other function. Could you send me message?

    0Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    5y

    @Wang Judy

    Yes.

    My purchases don’t always meet it from day 1. Sometimes it takes a few years of rent increases to get there.

    But often they can when purchasing distressed at a discount and rehabbing.

    2Reply
  • Judy Wang
    OP
    Member since 2021 · 27 posts · 11 votes
    5y
    Originally posted by @Max T.:

    @Wang Judy

    Yes.

    My purchases don’t always meet it from day 1. Sometimes it takes a few years of rent increases to get there.

    But often they can when purchasing distressed at a discount and rehabbing. 

    Thanks for your advice. It's inspiring. Time can also make money. I think now, it might be hard for me to find a distressed at a discount. 

    0Reply
  • Brandon SturgillBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    5y

    @Judy Wang I've never understood using rules like that when investing in real estate...there are 30 other metrics and intangible factors you should be looking at. To your question...you can find a property that meets your rule in any city in America....create your own market and stop participating in other people's...learn to source deals and structure a purchase money mortgage...

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    4Reply
  • Cody Harris
    Nampa, ID · Member since 2017 · 67 posts · 24 votes
    5y

    @Judy Wang are you open to Boise, Idaho area??

    0Reply
  • Judy Wang
    OP
    Member since 2021 · 27 posts · 11 votes
    5y
    Originally posted by @Cody Harris:

    @Judy Wang are you open to Boise, Idaho area??

    Hi Cody, sorry that I haven't heard about this place before, but I am open to any place and would love to know more. Could you DM me and introduce more?

    0Reply
  • Judy Wang
    OP
    Member since 2021 · 27 posts · 11 votes
    5y
    Originally posted by @Brandon Sturgill:

    @Judy Wang I've never understood using rules like that when investing in real estate...there are 30 other metrics and intangible factors you should be looking at. To your question...you can find a property that meets your rule in any city in America....create your own market and stop participating in other people's...learn to source deals and structure a purchase money mortgage...

    Em...thanks for your advice. 

    1Reply
  • Judy Wang
    OP
    Member since 2021 · 27 posts · 11 votes
    5y
    Originally posted by @Account Closed:

    Once it gets down to the armpit of the middle of nowhere so you can finally get your price-to-rent ratio, is it really worth it?

    Contrary to popular belief on these forums, location does matter. 

    Met a contractor a couple years ago who told me about his rentals in a place called Bad Axe MI:

    https://www.zillow.com/bad-axe...

    He bought there because it was affordable and he thought he had an advantage cause he knew the area. 

    Wanna guess how his Real Estate Investing journey has gone for him? 

    so how's his journey gone?

    0Reply
  • Dan Rowley
    Investor · Cary, NC · Member since 2012 · 214 posts · 194 votes
    5y

    @Wang Judy. It’s possible to find but the areas will not promising for long term investment potential.

    You might consider adjusting your criteria because the 1% rule is not a very good litmus test, imho.

    2Reply
  • Duane Alexander
    Investor · Atlanta, GA · Member since 2020 · 253 posts · 240 votes
    5y

    For the people that are saying that the 1% rule is not a good rule, are you guys just not worrying about cash flowing positively? 

    1Reply
  • Judy Wang
    OP
    Member since 2021 · 27 posts · 11 votes
    5y

    Thank you all for responding to this post. All valuable advices are appreciated. One more question coming up: it sounds like a lot of investors going to TX, FL, GA, OH for investments and the markets in those states, big cities in particular, are super hot. I assume that the property in those hot areas shall have very good appreciation (8-10%?) but may not have good cash flow, some may even be negative. Considering all these, is it still a good timing to invest in those hot areas? 

    Welcome to discuss~ Thank you!

    0Reply
  • Kalim Kalla
    Investor · Atlanta, GA · Member since 2018 · 103 posts · 116 votes
    5y
    Originally posted by @Judy Wang:

    Hi BP community,

    I am looking for property investment opportunities that can meet 1% rule. Based on my conversations with several agents in TX, FL and CA, the housing markets there are very crazy. Hardly can find 1% rental houses, and meet 0.5% might be the best. I am wondering, given current low interest rate and very hot housing market, is there any city can meet 1% rule?

    Any advices and opinions are welcome! Very glad to join this community and share ideas with you!

    Thanks!

    Hey Judy, I like the attitude. Don't let everyone get you too bummed about your ideal of investing its a solid start. In GA there are areas specifically in Atlanta that can get you to achieve the 1% rule or pretty damn close to it. I find quite a few opportunities really close to that rule on a monthly basis. Yes you might have to leave your comfort zone in some aspects when it comes to the amount of rehab you want to do or the proximity to your home location, but considering you are an OOS investor that doesn't seem like an issue. It very well can be achieved but is not super realistic to build a huge portfolio or consistently find deals. I would say you can keep to your 1% rule if you are okay only finding a deal every 3-4 months that fits right in there. But if you open yourself up just a bit to deals right under the 1% rule then you could see more opportunities. They do go off the table faster than other so you will need to capitalize on the opportunities when you find them.

    0Reply
  • Salvatore Lentini
    Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes
    5y

    Hi @Judy Wang - don't write off entire towns, cities or states because of high prices.  Even in areas with high prices, deals can be found.  I recently bought a commercial property in a high demand downtown area.  It hit the market and I put in a cash offer the same day.  The property had environmental cleanup issues (or they thought it did).  During my due diligence period and testing I was able to determine that the environmental issues were likely no longer a concern.  And only a concern if I decided to convert the commercial property back to residential (which I was not planning on doing).  Got the property and the week after closing got an appraisal and it appraised for 60% more than one I purchased it for.  So it can be done.  You either need to jump on something immediately, be flexible with your criteria (I didn't exactly have environmental problems on my list of things I was looking for - but I didn't rule the property out because of it - and in the end it didn't have environmental problems) and/or network like crazy to find off market deals and pocket listings.

    0Reply
  • Judy Wang
    OP
    Member since 2021 · 27 posts · 11 votes
    5y
    Originally posted by @Salvatore Lentini:

    Hi @Judy Wang - don't write off entire towns, cities or states because of high prices.  Even in areas with high prices, deals can be found.  I recently bought a commercial property in a high demand downtown area.  It hit the market and I put in a cash offer the same day.  The property had environmental cleanup issues (or they thought it did).  During my due diligence period and testing I was able to determine that the environmental issues were likely no longer a concern.  And only a concern if I decided to convert the commercial property back to residential (which I was not planning on doing).  Got the property and the week after closing got an appraisal and it appraised for 60% more than one I purchased it for.  So it can be done.  You either need to jump on something immediately, be flexible with your criteria (I didn't exactly have environmental problems on my list of things I was looking for - but I didn't rule the property out because of it - and in the end it didn't have environmental problems) and/or network like crazy to find off market deals and pocket listings.

    Hi Salvatore,

    Thanks for sharing your experience. It's really enlightening. Since I am out-of-state investor, I don't know whether it's possible for me to dig off market deals or not. I will learn more and try to do that. Thank you again!

    0Reply
  • Judy Wang
    OP
    Member since 2021 · 27 posts · 11 votes
    5y
    Originally posted by @Kalim Kalla:
    Originally posted by @Judy Wang:

    Hi BP community,

    I am looking for property investment opportunities that can meet 1% rule. Based on my conversations with several agents in TX, FL and CA, the housing markets there are very crazy. Hardly can find 1% rental houses, and meet 0.5% might be the best. I am wondering, given current low interest rate and very hot housing market, is there any city can meet 1% rule?

    Any advices and opinions are welcome! Very glad to join this community and share ideas with you!

    Thanks!

    Hey Judy, I like the attitude. Don't let everyone get you too bummed about your ideal of investing its a solid start. In GA there are areas specifically in Atlanta that can get you to achieve the 1% rule or pretty damn close to it. I find quite a few opportunities really close to that rule on a monthly basis. Yes you might have to leave your comfort zone in some aspects when it comes to the amount of rehab you want to do or the proximity to your home location, but considering you are an OOS investor that doesn't seem like an issue. It very well can be achieved but is not super realistic to build a huge portfolio or consistently find deals. I would say you can keep to your 1% rule if you are okay only finding a deal every 3-4 months that fits right in there. But if you open yourself up just a bit to deals right under the 1% rule then you could see more opportunities. They do go off the table faster than other so you will need to capitalize on the opportunities when you find them.

    Thanks for your advice Kalim, I will consider that!

    0Reply
  • Corey Hawkinson
    Rental Property Investor · Bloomington, MN · Member since 2019 · 404 posts · 542 votes
    5y

    @Wang Judy As others have mentioned it does take a lot more work but deals can be found in most markets. I found a 5-unit in the greater Twin Cities area for $330k where combined rents are $3,800 per month. But you need to put in work and be connected. To my knowledge, I was 1 of only 2 people who were presented that deal. And the other person referred it to me so it takes some combination of effort and luck.

    2Reply
  • Judy Wang
    OP
    Member since 2021 · 27 posts · 11 votes
    5y
    Originally posted by @Corey Hawkinson:

    @Wang Judy As others have mentioned it does take a lot more work but deals can be found in most markets. I found a 5-unit in the greater Twin Cities area for $330k where combined rents are $3,800 per month. But you need to put in work and be connected. To my knowledge, I was 1 of only 2 people who were presented that deal. And the other person referred it to me so it takes some combination of effort and luck.

    Hi Corey,

    Thanks for sharing your experience. Yes, I will stay connected with local professionals first and keep an eye on the market. Then, cross my fingers~ 

    BTW, your profile picture is so cute~ Love the kid! ><

    0Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    5y

    Birmingham, Atlanta, Indianapolis, St Louis, Kansas City, Memphis, Little Rock, Indianapolis, Greenville, Jacksonville, Tampa, Houston, San Antonio, Little Rock, Milwaukee, Cincinnati, Dayton, Cleveland, Ohio, or other secondary or tertiary markets.

    10Reply
  • Andria Edwards
    Member since 2021 · 3 posts · 0 votes
    5y

    I feel your pain.  I've also been looking to purchase my first property using the 1% and can't find anything in either market I'm looking in.  And one of those markets is listed in this thread as an area that should have them.  I think a lot of properties that hit this bench mark are being sold off market.  Personally I am thinking about skipping the 1% rule and analyze properties that look good on my own.  IE am I making money after all expenses are paid, are GDP and Population growth for the area looking good, etc.  It's going to require more effort on my end but something has to give lol. and I'm willing to work for it!  Maybe you should find properties that look good to you and do a break down and see where the cash flow is? 

    0Reply
  • Zeke ListonBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    5y
    Originally posted by @Judy Wang:

    Hi BP community,

    I am looking for property investment opportunities that can meet 1% rule. Based on my conversations with several agents in TX, FL and CA, the housing markets there are very crazy. Hardly can find 1% rental houses, and meet 0.5% might be the best. I am wondering, given current low interest rate and very hot housing market, is there any city can meet 1% rule?

    Any advices and opinions are welcome! Very glad to join this community and share ideas with you!

    Thanks!

     Hi Wang, I would check out Columbus, OH. It's still tough to find the 1% but doable. 

    [email protected]614-665-5793
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  • Dave PoeppelmeierBusiness Member
    Realtor · Maumee, OH · Member since 2015 · 491 posts · 722 votes
    5y

    You can still easily get 1%, even 1.5% in Toledo. If you get lucky there's still the elusive 2% out there...

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    1Reply
  • Steve Stackman
    Investor · Fairborn, OH · Member since 2012 · 36 posts · 26 votes
    5y

    I have several around southwest Ohio that exceed the 1% rule that I will be selling this spring. All rehabbed, rented, long term tenants just typical periodic maintenance calls any property manager can handle. Selling the single family units and small multis to move into some commercial real estate. Let me know if anyone is interested before I put them on the MLS.

    3Reply
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