The So-called 1% Rule for Real Estate Investments

by Ernesto R. Martin

The so-called 1% Rule that experts recommend (used to be the 2% Rule but in today's world that is seldom achievable) suggests that the $200,000 purchase in my example would require a monthly rent of $2,000, rather than $1,600. Others believe that the 1% Rule is more applicable for low-cost properties, where a $50,000 unit may rent for $500, but such cheap properties (and their tenants) have greater delinquency, frequent need of repairs, and greater turn-over -- things I try to eliminate -- plus less appreciation.