Should I adhere to the 1% rule in a low cap rate market???

[Ellis Hammond]

In a market like southern California where the cap rates are for the most part under 5% it has been very difficult for me to find any type of MF property that meets the 1% rule (rents being at least 1% of purchase price).

Should I just keep looking until I find the needle in the haystack or are there other criteria that is more important when trying to invest in a cash flowing buy and hold investment property? 

[Andrew Johnson]

@Ellis Hammond So let's be practical for a second...

1.) There are plenty of people (and investors) with money in Southern California.

2.) Most investors would love to invest close to home.

3.) Most investors would kill for a 1% property in Southern California.

4.) If the unicorn does reveal itself, will you be able to compete?  Given...

     4a.) Your investor competition will likely bid the price over asking.

     4b.) Your investor competition can likely to an all-cash quick-close deal.

So even if you do find the needle in the haystack do you think you have the means to pull the deal across the goal line?

I'm not trying to be overly negative, just focusing on the pragmatic side of things.  I personally think that most people who invest in Southern California are banking on appreciation (land value and rent increases), want an asset they can drive by versus fly to, are willing to self-manage and get to save the cost of PM, and Prop 13 at least stabilizes property tax costs so 20 years from now the investment performs much better on the ol' spreadsheet.  So there are plenty of reasons to invest in Southern California but I don't know that immediate cash-flow is one of them.