Clarification on the 1% rule, please

[Vinh Nguyen]

Hi!

Regarding the 1% rule, does it apply to the price the property was purchased alone or the price of the house plus repair cost? I would assume it applies to only the cost of the house. Just looking for confirmation. Thanks! 

[Arthur Garcia]

I am probably in the minority here, but don't overly obsess with "rules".  There are other aspects to real estate far more important, consider the following:

- What is the average yield in my market?
- What type of property am I looking to invest in? Be specific - not just SFH or Multi, get more granular - sq ft, bed bath, zip codes, etc. More quantitative data you have the better you can measure your return.
- What is my time horizon to hold? 
- Are you factoring equity capture, or forced appreciation potential?
- Are you factoring mortgage paydown and interest deduction as part of your return?
- Are you comfortable investing in the areas that provide 1% rule returns?  AKA in a lot of markets these are in rougher areas

I only bring some of these up, because too often people get caught up in these "rules".  It is more important to understand your market, formulate a plan and pivot accordingly.  Just my .02.