Is the 1% rule still a reliable metric in today's market?

real estateinvestingrental property

Georgi_Pro

Joined:
27.04.2023
Posts: 394

Topic Starter

15.01.2025 03:53

I've been looking at potential rental properties for months, but with interest rates where they are and home prices still hovering near all-time highs, I'm finding it impossible to hit the 1% rule. Most of the listings I see are lucky to hit 0.6% or 0.7%, which barely covers the mortgage and expenses. I'm starting to wonder if I should keep hunting for that unicorn property or if I need to adjust my expectations and focus on cash flow in other ways. Has anyone here managed to find a deal that actually hits the 1% mark lately, or is that standard just completely dead in the current economy?

13 replies in this topic

Kras_T

Joined:
24.07.2021
Posts: 1143

30.01.2025 00:07

The 1% rule is pretty much a relic of the past in most major markets. Unless you're looking in a very specific tertiary market or a war zone, you're just not going to see those numbers anymore.

Stefan_W

Joined:
05.03.2021
Posts: 2303

19.03.2025 23:55

In reply to a previous post

Totally agree with the previous comment. I stopped chasing the 1% rule months ago because it was just leading to analysis paralysis. I'm focusing on long-term appreciation now.

chicho_savet

Joined:
17.02.2023
Posts: 1184

23.04.2025 11:11

I actually closed on a duplex last month that hits 1.1%. It’s definitely not dead, but you have to look at off-market deals. The MLS is picked clean by institutional investors.

Hubo_K

Joined:
16.02.2023
Posts: 358

08.05.2025 03:32

In reply to a previous post

To the person who found that 1.1% deal: where are you located? I've been scouring the Midwest and even there, 0.8% is the best I can find.

simon_v

Joined:
09.05.2021
Posts: 2222

08.05.2025 16:17

It’s dead. Move on to the 0.7% rule and adjust your cash-on-cash return expectations. You're competing with high interest rates and inflated prices, so the math has to change.

iztrit_potrebitel

Joined:
13.07.2024
Posts: 1599

07.07.2025 18:29

In reply to a previous post

I think the rule is only useful as a quick filter, not a hard requirement. If a property hits 0.7% but has massive value-add potential, it might be a better buy than a 1% property that's already fully renovated.

Ekspert_11

Joined:
19.12.2024
Posts: 757

21.07.2025 02:34

The 1% rule was never a magic number anyway. It ignores so many variables like property taxes, insurance hikes, and maintenance costs which are all way up right now.

mati_123

Joined:
15.09.2022
Posts: 1629

29.07.2025 19:41

In reply to a previous post

I’m in the same boat as you, OP. I’ve realized that trying to force a 1% deal in this economy usually means buying in a neighborhood I wouldn't want to manage remotely.

ChernaKotka

Joined:
14.12.2022
Posts: 706

12.09.2025 01:55

Have you considered house hacking? That’s the only way I’ve been able to make the numbers work lately. It effectively lowers your cost basis.

vesko_55

Joined:
07.03.2024
Posts: 2201

06.12.2025 10:46

In reply to a previous post

Exactly. House hacking changes the math entirely. The 1% rule is meant for pure investments, but for a primary residence/rental hybrid, you can be a bit more flexible.

Filip_G

Joined:
01.08.2022
Posts: 1830

07.12.2025 09:36

In reply to a previous post

Stop looking for the unicorn and start looking for value-add opportunities. If you can force appreciation through renovations, you don't need to worry about the 1% rule as much on day one.

vesko_55

Joined:
04.07.2022
Posts: 658

24.12.2025 01:56

Is anyone actually cash flowing with 0.6%? With current mortgage rates, that sounds like a recipe for negative cash flow to me.

SamoPitam

Joined:
19.11.2020
Posts: 1299

28.02.2026 04:15

In reply to a previous post

To answer the person asking about cash flow: you're right, 0.6% usually results in negative cash flow unless you put 40% or 50% down. It's tough out there.

Is the 1% rule still a reliable metric in today's market?

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