What is the 1% rule in Memphis?

Question

What is the 1% rule in Memphis? We've been using it for 20+ years and it's still 100% applicable today.

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Douglas Skipworth · Answer

You're right, @Jordan Ray, that's exactly what @Dean Harris and I are seeing in Memphis right now. Sellers are motivated and buyers can find deals that beat the 1% rule. How long this opportunity lasts is anybody's guess, but now is a really good time to be looking for deals!

Jordan Ray · Answer

With the current interest rates, the 1% is not cash-flowing like it should so properties are needing to be sold slightly lower than that (greater than 1%) in order to cashflow but the good news is, lots of sellers are very motivated and happy to see an offer. This is a perfect setup to get them slightly cheaper than the 1% rule and then refinance them after a few years and then increase the cashflow spread greater than it would if you offered right at 1%. That is just what I am seeing, what are y'all seeing?

What is the 1% rule in Memphis?

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