1% Rule on off market Duplex Deal
I am currently running numbers on an off market deal for a duplex in my area. I am using the one percent rule but would like some clarification on when I should run the calculation. Does the 1% or 2% Rule come into play before subtracting operating expenses from monthly income or after? It seems obvious to me that it is after subtracting expenses but I would just like to confirm. Thank you in advance for your reading this and your help.
Most Popular Reply
@Russ Marlborough
Before any expenses. It's a quick and dirty math of total rents divided by purchase price. I use 1% to see if I should then START doing the real math. For example, if there is $2,000 in rents and an asking price of $210k, I might do more math. But if landlord pays any utilities then you'll have a very hard time making any money. 1% could work if you only pay PITI, and self manage (with reserves each month of course).