Do you still use the 1% rule?

[Account Closed]

Do you still look for or follow the 1% rule when looking for an investment property?

Heres the scoop: I am looking to sell my duplex. Based on the 1% rule, I could sell it at 259K but I'll be listing more around $240K so that comps in the area can support it well (highest sold in last year was $260K & its slightly larger with 1 more garage space). Tell me, is this something you as an investor or even an owner occupant would buy?

I am skeptical because I bought it for $120K 3 years ago & renovated with $40K and got it fully occupied. Im just shocked that the value increased so much based on comps.

[CJ M.]

@Suny Capezzuto

Hi Suny,

Personally, I don't pay much attention to the 1% rule (although all my properties exceed it). If it cash flows ($200+ for SFR's) and my CoC return is good (usually 75%+), then it's a good deal for me (my all-in purchases are generally in the $50-$70K range for reference).

As far as selling vs. Holding your current property, I don't think anyone can tell you what is best. You need to ask yourself how both options impact your ability to hit your goals. Does the property CF now? If you held it, do you have capital to continue to grow your REI? What if you took a HELOC out instead of selling? Etc.?

As you've probably read on here, equity is seen differently by investors. Some view it as "cash in the bank," while others feel it's "wasted money" because you're not earning interest on it (and what happens if the property value drops over time?).

Again, just my personal thoughts. Best of luck with your decision.