Why the “1% Rule” Might Be Limiting Your Portfolio Growth

[Joseph Tubbs]

For years, the 1% rule has been gospel in buy-and-hold circles: if a property rents for 1% of the purchase price, it's worth considering. But is this rule helping investors make smarter decisions—or holding them back?

Let’s break it down:

• A $100K property renting for $1,000/month hits the 1% mark, sure.

• But what if that same property has $300/month in maintenance and sits in a stagnant, low-growth area?

• Meanwhile, a $200K property renting for $1,600/month (0.8%) might cash flow similarly—but it’s in a zip code with rising wages, strong schools, and double-digit appreciation over the past 5 years.

I’m not saying throw the 1% rule out entirely. It’s a good gut check. But in today’s market—especially in undervalued Southern metros—it’s often more productive to look beyond monthly rent ratios.

Who here has bought under 1% and still crushed it?

[Joe Villeneuve]

The 1% Rule hasn't been gospel in any real estate religion, for any time.  It, and it's sister 2% rule, are analysis tools for the lazy and those that don't know what they are doing...and that's Gospel.