Posted by Rob FL on June 29, 2003 at 11:21:27:
Just FYI - Jim Kennedy has a money making idea about 33 ways to find motivated sellers.
In the last year or so, I’ve gotten deals from bandit signs, ads in newspaper, MLS, HUD list, my website, referrals from various people, wholesalers, mailouts, signs on car, and I’m sure a few other places. In this economy, the deals are everywhere. Mortgage delinquency rates are high.
Whatever happened to the 1% rule? - Posted by ChrisNJ
Posted by ChrisNJ on June 28, 2003 at 17:11:02:
Whatever happened to the 1% rule? (Or was there ever such a rule)?
You know, if a property can rent for 900 per month, then it’s worth 90K.
Does anyone use this rule of thumb anymore?
Has anyone used it in the past?
Does it have any validity?
If so, why are condos that rent for a thousand bucks a month selling for 150 K?
Just curious.
Chris
Re: Whatever happened to the 1% rule? - Posted by GL - ON
Posted by GL - ON on June 29, 2003 at 08:53:29:
It still works. All it does is tell you if you are the ball park. The ball park being, positive cash flow.
Re: Whatever happened to the 1% rule? - Posted by Rob FL
Posted by Rob FL on June 28, 2003 at 19:35:25:
Generally the higher the price, the less likely the 1% rule is going to work. In my location, once the price passes about 80K the 1% rule goes out the window.
Re: Whatever happened to the 1% rule? - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on June 28, 2003 at 18:51:28:
Chris-----------------
I think it may be useful in some areas. Or a modified one, maybe 0.8% of value a month.
But that rule of thumb probably applies in lower priced properties. I’d guess it works for under $60K properties.
When you get to higher-priced properties the ratio is lower, or worse. This is a general rule.
Good InvestingRon Starr*
Re: Whatever happened to the 1% rule? - Posted by tyler
Posted by tyler on June 28, 2003 at 18:14:21:
The only purpose i use this rule of thumb is that know if the ratio falls close to 1% or over it wont cash flow for me.
Re: Whatever happened to the 1% rule? - Posted by John (Rome)
Posted by John (Rome) on June 28, 2003 at 17:30:04:
rules of thumb can kill you…'nuff said. 
Cheers.
J.
Re: Whatever happened to the 1% rule? - Posted by RichV(FL)
Posted by RichV(FL) on June 28, 2003 at 19:53:45:
Rob,
Yes…and the 80K properties are getting tougher to find here in Florida.
In the Sarasota area the 1% rule is getting tough to follow. Values are shooting up like crazy and rents are not keeping up.
I’m sure you are seeing the same in your neck of the woods also.
Regards,
RichV(FL)
Re: Whatever happened to the 1% rule? - Posted by bob(ma)
Posted by bob(ma) on July 01, 2003 at 12:23:03:
The 1% rule is way out of whack here in Ma. I can’t even give you examples comparable to what is see on the other posts. You will never find an $80,000 piece of property here…most vacant lots of land cost more than $80,000…maybe i should move south
Re: Whatever happened to the 1% rule? - Posted by Rob FL
Posted by Rob FL on June 28, 2003 at 20:13:09:
Market is unbelievably busy here, but I can find more good deals than I can even handle. The rental market has gotten a little soft, because almost anybody with a pulse can get a loan with these low rates.
My rental screening has had to get a lot looser. Pretty much as long as they can come up with the money and they didn’t just escape from prison then they are qualified (just kidding here), but the rental market is quite soft.
Re: Whatever happened to the 1% rule? - Posted by Tom-FL
Posted by Tom-FL on July 01, 2003 at 17:35:54:
Not as far south as FL. There are a few $80,000 properties here. You have to visit them at your own risk though. The cops are too chicken to escort you.
Re: Whatever happened to the 1% rule? - Posted by Alexander Manuel
Posted by Alexander Manuel on June 30, 2003 at 09:03:31:
If you work with Section 8 tenants, you will never have a shortage of applicants lining up. All of my units in Miami, Homestead & Fort Pierce are fully rented, and I’m still getting calls from people looking for housing.
The only drawback I’ve had working with Section 8 is that you will have a 30-day vacancy rate up front due to the time it takes them to receive the packet, review the paperwork, schedule the inspection, complete rent survey, etc… Other than that, it’s been pretty good.
As for the 1% rule, I use it as a baseline for my low income properties. I average about 1.5% on my properties, and tend to walk away from properties priced such that I can’t even hit the 1% mark (low income of course). Each time interest rates drop the asking price for property goes up, and rents in general just haven’t caught up yet.
Alexander Manuel
Re: Whatever happened to the 1% rule? - Posted by RichV(FL)
Posted by RichV(FL) on June 29, 2003 at 13:57:18:
Rob,
I’m glad to hear you’re still finding the deals out there.
And our rental market here is soft also. I have two vacancies right at this moment because both of the tenants that were renting from me purchased thier own homes. Like you said…anyone with a pulse can get a loan now.
Regards,
RichV(FL)
Re: Whatever happened to the 1% rule? - Posted by Tom-FL
Posted by Tom-FL on June 29, 2003 at 01:37:50:
Where are you finding these good deals? Calling the ads in the paper? Or are they calling you, as a result as your marketing efforts? If so, what methods are you using?
Re: Whatever happened to the 1% rule? - Posted by Rob FL
Posted by Rob FL on June 30, 2003 at 10:43:40:
Section 8 is a good program, but the demand for it isn’t as high where I am at as it is in other areas of the country.