Does the 1% rule still apply in today’s market?

[Jesse Paxton]

I've been working on getting into my first rental property in the DFW market. As i analyze deals, it seems almost impossible to reach even the 1% rule because rents hardly cover PITI (more like the -1% rule). Is the 1% rule a thing of the "old economy" with low interest rates or am I just looking in the wrong markets for cashflow and should be looking for appreciation instead. My question is, should I still be looking for this kind of deal that meets the rule (as a guideline) or should I buy to breakeven today so that "one-day" when equity gets paid down and rents go up I'll eventually cashflow, OR should I wait until cashflow is better all together when it makes sense to buy? Let me know your thoughts!!

[Rebecca Graziano]

Cash flow is next to impossible right now in DFW. Unless you look for an assumable loan or seller financing, forget it. The property taxes and insurance rates will eat any profit you projected, assuming you don't have an HOA. Many listings are dropping price, or just sitting on the market, but it's still an overall bad market as an investor. Forget looking for multifamily. Condo HOAs are sky-high, but wages cannot keep up. It doesn't take a genius to know this isn't sustainable.