👋Hey, real estate investors! Want to find the right home that generates a positive cash flow? 🤔The 1% rule in real estate can help!💰Here are 10 points to help you understand and apply the 1% rule.
1️⃣ The 1% rule measures the price of the investment property against the gross income it will generate.
2️⃣ For a property to pass the 1% rule, its monthly rent must be equal to or no less than 1% of the purchase price.
3️⃣ The 1% rule is a good prescreening tool to determine a good investment from a bad one.
4️⃣ To calculate the 1% rule, multiply the purchase price of the property by 1%.
5️⃣ If the property requires any repairs, factor them in by adding them to the purchase price, then multiplying the total by 1%.
6️⃣ Remember, the 1% rule is just a rule of thumb. Consider other factors when determining how much rent to charge.
7️⃣ An investment property that passes the 1% rule generates a monthly rent that is equal to or greater than 1% of the purchase price.
8️⃣ An investment property that does not pass the 1% rule generates a monthly rent that is less than 1% of the purchase price.
9️⃣ The 1% rule doesn't work in expensive cities where the median rent is lower than 1% of the purchase price.
🔟 Consider other factors like net operating income and internal rate of return to calculate the profitability of an investment property.
Remember, the 1% rule is a good starting point, but not the only factor to consider when making an investment decision.👍 Happy investing! 💸
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