What is the 1% rule in real estate?

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The 1% rule in real estate is a guideline used by investors to quickly assess the potential profitability of rental properties. According to this rule, a property's monthly rent should be at least 1% of its total purchase price. For example, if a property is purchased for $100,000, it should ideally generate at least $1,000 in rent each month. This rule serves as an initial filtering tool to identify properties that might yield a reasonable return on investment before engaging in more detailed analysis 1 2 3.

The 1% Rule

Paula explains the concept of the 1% rule in real estate investing and why it's a useful filtering criteria when looking at potential properties. She also discusses exceptions to the rule and alternative ways to achieve the desired returns.

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247 | Zach and Marilyn Talk Real Estate Investing | Paula Pant
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