Hi @Sam Wydner
I have not had any luck with the 1% rule for a couple of years now. With the recent price escalation, it can be tough to find properties that rent as high as the sales price, even if it needs rehab. Most of the investors I know are happy to get in the .7% to .8% range. I did speak with an investor who is buying up newer homes because he can charge more monthly. He doesn't have anything older than 2010 in his portfolio. I was touring a new build with a client last year and the salesman there told me he had an investor buy three of his lower priced new models since he could charge the top rate for rent. Finally, I know of a couple of investors who just deal in rural areas, specifically mobile homes because you can get close to 1% with these properties. Just some ideas. Let me know if I can help.
Thanks for the response Adam,
I kinda figured it would be tough based off of what I can find. I’m going to venture out to surrounding markets and see if I have any luck getting at least close.
@Sam Wydner The 1% rule doesn't apply in most major American metropolitans with population and job growth. Depending on the market, this can be a good or bad thing (if you go the way of California, you are banking on capital appreciation, which is nice but not as predictable).
I am assuming you are only looking into SFRs. If so, within the DFW you might either have to move south (think DeSoto and beyond) or find specific neighborhoods. Nonetheless, you would still find it hard to hit the 1% number.
As @Adam Wright has mentioned, SFR investors are happy with 0.7-0.8% range.
Best of luck!
I agree with Omar. I have recently seen a few properties that meet the 1% rule (or very close to it) in the south Dallas area, specifically Desoto and Lancaster. From my experience, it becomes less likely the higher you go in price point. I did have a client last fall that was looking for turnkey properties that met the 1% rule in Arlington near UTA and we were able to find several but there’s nothing out there like that currently that I’ve seen.
Are you estimating 1% only off of listed asking prices? If you can get it under contract and negotiate for some discounts later, there are properties that just sit because of high asking prices...
@Sam Wydner I was able to purchase a duplex for 285k in June that is currently renting for 3200 and will be able to increase to 3400 in due time. I've also purchased a 210k SFH and put 25k into it and it'll return about $2,200 in rent. There are options out there - and I work specifically towards the north side of Dallas - BUT you have to be willing to put some work into the properties. I'm accumulating a decent sized portfolio, but even if a property doesn't reach that 1% rule - it still can be a very solid investment if you know what you're looking at.
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