What is the 1% Rule for Real Estate Investing?


What is the 1% Rule for Real Estate Investing?

There are many ways to evaluate a real estate deal, but one common method utilized by investors is the 1% Rule. This rule of thumb helps investors determine if their investment will be safe and profitable.

In today’s video, I’m discussing everything you need to know about the 1% Rule. I’ll give a straightforward definition, and share concrete examples. I’ll discuss my experience with this idea, and how you can use it in your real estate business!

This video is for you if you’ve ever wondered how to quickly evaluate deals. You’ll learn about the 1% Rule for real estate investing, and when it is appropriate. Press play to learn more!

Show notes page for this episode: https://goo.gl/rZEKTe

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20 Responses to What is the 1% Rule for Real Estate Investing?

  1. TopTenTuesday

    Very well explained!

  2. Ryan Stubbs

    Very useful. Thank you.

  3. nbookie

    Wish you would use cashflow different than income. Passed this around the lifestyles unlimited club and everyone thought you were nuts until they realised the definition of cash flow to most is "what left after expenses" but is different in this video.

    That said, 1% is easy. 1.5% means you well above average. 2% we are looking for an adjustment in the market coming because something is upside down. Unless you are buying the complete gut jobs in a war zone (one friend has about 30 of them).

  4. Sam jsh

    So if i buy a $1 million property then my net cash flow (Rental income minus PITI minus HOA) should be 10k? Are you sure?

  5. Kevin Jacques

    While the 1% is a good rule of thumb, it is meant to calculate GROSS RENTAL INCOME and not CASHFLOW. Please use the correct terms in future videos.

  6. Ollie vw

    Interesting topics, unfortunately this rule doesn't hold true for properties in The Netherlands. Our building methods are much more durable than standard American housing and therefore far more expensive. We are happy to get a return of some six percent on a yearly basis. But still thanks for your videos. They are definitely food for thought.

  7. vinh to

    I have 2 rental properties. If i pay the mortgage off. I wouldnot be able to deduct my interest on my tax.. i wonder if which way is better off.. pay off mortgage or keep the mortgage so i can deduct thr tax? It may be a dumb question.. but hope someone can break it down for me

  8. DPIII1

    I thought the money, you get from your rentals was only called "cash flow," only, after you accounted for all expenses already!!?

  9. Bee Enterprise

    I love your videos! The information you provide is very useful and easy to understand. I'm a college student, and many of my professors aren't able to explain things as clear as you can. I'm very appreciative of your channel. Thanks.😊

  10. Scott Heitman

    I love your voice and delivery, Even if I wasn't into this stuff I would watch.

  11. StirCrazy

    So my $125k house which pays $1,650 mo & $145k which pays $2,350 mo isn't too bad.

  12. stgeorgn

    I am from Quebec in Canada, it takes min 6 months to kick someone out and the 1 % rule dont exist. Everything is more expensive than that because of our low interest rate

  13. BiG PaPI8

    What are your thoughts on multi dwellings? 2 family house.

  14. BiG PaPI8

    Do you include the total cost of the renovation & cost of the property?….

  15. S. CROWE

    Hello Morris I have a question let's say you have a property and the main components check out good the roof electrical water heater window plumbing etc. However the property just needs some cosmetic things to make it more appealing to the eye. Can you do a video on a general budget that you have for your fixers? For example I don't spend over .25 per square foot for tile or I don't pay over $2000 for new cabinets or I don't pay over $200 for light fixtures. Im asking because sometimes the prices for materials seem good and you look up and you will have blown your Reno budget…thanks I hope my question makes sense.

  16. Olivia P

    I got an offer from a seller to buy 5 properties as a package deal today. The purchase price is 77x the rent. No condos/apts/fee like hoa, inside city limits (city water and sewer), heat pumps – I will walk through them on Thursday, the outsides look normal/average. 77x the rent is the most I've ever paid for a property though …. you've posted videos on us being in a housing bubble and that a crash is coming … assuming the insides are decent, would you invest in something like that if it were offered to you?

  17. La Gom

    What kind of property is 40k? Mobile homes?

  18. WICKEDLEE LOOPY

    Most people would get 7-9% p/a. To get 1% per month is equivalent to 12% p/a . It's unheard of. I'm calling B.S on this.

  19. Hippiearth420

    I have always been told 2% rule, in my area I have found it tops out between 0.5% and 0.75% so while I like the city I am waiting for the bubble to crash again, or buy way out like over an hour out in some small town, but even small town prices are coming up too.

  20. Las Vegas

    I use to think 1% rule was great with real estate until I started getting into crptocurreny….If I invest $100,000 in real estate, I only get $1,000 cashflow…that is considered horrible in crypto currency. In cyptocurrency if I invest $100,000, I expect at least $9,000/month from some platforms, and that is very very very conservative. But for me, I would expect $30,000/month or even $60,000 on some hidden coins