is the 1% rule dead in 2023? No and here's why

is the 1% rule dead in 2023? No and here's why

Robert EllisBusiness Member
Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes

The old tried and true 1% rule. People ask if it's still possible to get this. What I say: "reverse engineer what you want and use data to do so." 

In Columbus Ohio in cash flow zips (class C), section 8 is one good strategy to achieve 1% rule. Working with an experienced property manager who manages section 8 is also important. Bedroom count is typically the biggest driver of section 8. How do I find out what section 8 will pay? 

The Columbus Metropolitan Housing Authority posts this. You can also talk to an experienced property manager who can tell you what they are too. Here is the chart:

So if you look at properties available at less than $156k per unit, you would be hitting the 1% rule and also less than 52k per bedroom. As of this posting, there are properties like this that are currently available with month to month tenants in 43211. Some less than $200,000 even. That's an easy way to see how that goes. 

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Marc RiceBusiness Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
3y

Great share. Do you know how to calculate the "utility portion" of the rent that section 8 then deducts from the table you listed above to get the "net rent" amount? I'm curious on how that varies by bedroom count.

Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews
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  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    3y

    Great share. Do you know how to calculate the "utility portion" of the rent that section 8 then deducts from the table you listed above to get the "net rent" amount? I'm curious on how that varies by bedroom count.

    Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews
  • Alfath AhmedBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
    3y
    Quote from @Robert Ellis:

    The old tried and true 1% rule. People ask if it's still possible to get this. What I say: "reverse engineer what you want and use data to do so." 

    In Columbus Ohio in cash flow zips (class C), section 8 is one good strategy to achieve 1% rule. Working with an experienced property manager who manages section 8 is also important. Bedroom count is typically the biggest driver of section 8. How do I find out what section 8 will pay? 

    The Columbus Metropolitan Housing Authority posts this. You can also talk to an experienced property manager who can tell you what they are too. Here is the chart:

    So if you look at properties available at less than $156k per unit, you would be hitting the 1% rule and also less than 52k per bedroom. As of this posting, there are properties like this that are currently available with month to month tenants in 43211. Some less than $200,000 even. That's an easy way to see how that goes. 


     This is a common questions I get asked from many investors who want to hit the 1% rule or even higher. Columbus is definitely a more appreciating market. The 1% rule is easier to hit in Cleveland, Cincinnati, Dayton, Akron, and the surrounding areas.

  • Robert EllisBusiness Member
    OP
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    3y
    Quote from @Alfath Ahmed:
    Quote from @Robert Ellis:

    The old tried and true 1% rule. People ask if it's still possible to get this. What I say: "reverse engineer what you want and use data to do so." 

    In Columbus Ohio in cash flow zips (class C), section 8 is one good strategy to achieve 1% rule. Working with an experienced property manager who manages section 8 is also important. Bedroom count is typically the biggest driver of section 8. How do I find out what section 8 will pay? 

    The Columbus Metropolitan Housing Authority posts this. You can also talk to an experienced property manager who can tell you what they are too. Here is the chart:

    So if you look at properties available at less than $156k per unit, you would be hitting the 1% rule and also less than 52k per bedroom. As of this posting, there are properties like this that are currently available with month to month tenants in 43211. Some less than $200,000 even. That's an easy way to see how that goes. 


     This is a common questions I get asked from many investors who want to hit the 1% rule or even higher. Columbus is definitely a more appreciating market. The 1% rule is easier to hit in Cleveland, Cincinnati, Dayton, Akron, and the surrounding areas.


     It's great to hear that you've been getting a lot of interest from investors! You're absolutely right about Columbus being a more appreciative market. While hitting the 1% rule can be a bit more challenging here, it's not impossible. There are certainly opportunities, especially in specific neighborhoods or property types. However, if you're looking for more immediate returns, cities like Cleveland, Cincinnati, Dayton, Akron, and their surrounding areas can offer more favorable conditions. It ultimately depends on your investment goals and risk tolerance.

  • Real Estate Agent · St. Petersburg, FL · Member since 2020 · 46 posts · 36 votes
    3y

    I'm glad to know it still exists. Seems hopeless here in Tampa.

  • Robert EllisBusiness Member
    OP
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    3y
    Quote from @Marc Rice:

    Great share. Do you know how to calculate the "utility portion" of the rent that section 8 then deducts from the table you listed above to get the "net rent" amount? I'm curious on how that varies by bedroom count.

    Calculating the "utility portion" for Section 8 can vary depending on a few factors, including location, the specific Section 8 program, and the size of the rental unit. Generally, it's determined by looking at average utility costs for the area and the size of the unit.

    For example, some Housing Authorities might have a predetermined utility allowance based on the number of bedrooms in the unit. This allowance is subtracted from the total rent to get the net rent amount.

    Keep in mind that these figures can change over time, so it's important to consult with your local Housing Authority or HUD office for the most up-to-date information. They often provide detailed schedules of utility allowances.

    If you're looking for a specific breakdown for Columbus, I recommend reaching out to the local Housing Authority or a property management company experienced with Section 8 rentals in the area. They can provide you with the most accurate and current information.

  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    3y

    Don't forget about Detroit!

    Logical Property Management4.9454 Reviews
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