I run the 1% rule on every deal I look at in Memphis. It's a quick filter, not a religion.

Here's how my numbers work. I buy single-family houses under $100K, rehab them, and rent them out. A lot of my rehabs are conversions — 2/1 to 3/1, 3/1 to 4/2 — because the extra bedroom pays for itself on both rent and appraisal. ARV lands between $180K and $265K, and I refi on DSCR at 70-80% LTV. That formula got me to 236 doors.

On Section 8 deals I break the 1% rule constantly — but I break it in the good direction. I buy all-in under $100K and rent 3BR+ homes at $1,395-$1,950 a month. That's way past 1%. The cash flow plus the equity I capture on the refi more than covers any deal that barely misses.

When do I break it the other way and take less than 1%? When the deal still cash flows after the refi, the rehab is simple, and the property is in one of my core ZIPs — 38109, 38111, 38112, 38114, 38116, 38117, 38118, 38122, 38128. I'd rather take a slightly thinner ratio on a street I know than chase a bigger number somewhere I can't find a crew.

My bottleneck isn't the rule. It's deal flow — finding enough good buys to keep the machine fed.

What rule do you actually underwrite with — the 1% rule, 2% rule, or something else?