Forget the 1% Rule: How Real Estate Investors Should Really Determine Rent Prices
The 1% rule used to be a pretty good first metric to determine whether a property would likely make a good investment. By figuring 1% of a property's price -- which would be the monthly rent goal -- it was the fastest way to make a yes-or-no determination on whether to proceed with considering a property to rent out.
If you could likely get that figure, you'd move forward with other due diligence methods, such as determining cap rate, rating the neighborhood, and getting the house inspected. If you didn't think you could get close to 1%, you'd move on to another property.
The 1% rule worked in pre-pandemic times. But it doesn't work anymore. For example, in 2015 the median home price in Atlanta (where I invest) was $187,000. I could easily get homes in the $150,000 price range and charge close to $1,500 a month for rent.
Source Fool.com
