1% Rule

[Jamie Larson]

Hi!

First Post on Bigger Pockets:  I've heard about the 1% rule of charging 1% of the property's purchase price for monthly rent.   I've even heard about the rule being called a 2% rule.  I'm just getting started in researching real estate in the Bay Area CA and don't see investing in the area, while keeping that rule in mind is possible.  Even if you're looking out of the city, you can pay $1M for a duplex.  Does this rule mean that you won't make a profit unless you charge $5,000 per 2 bedroom/month?  That rental price is way too high. Why are people purchasing these buildings if they are nowhere near breaking even?

Jamie