Does the 1% rule apply to all prices of homes?

[Trent Rogers]

My wife and I are in little bit of a tight spot. The guy that purchased the empty lot next to us has made an offer on our house. It's a long story, but trust me, it's most advantageous to negotiate and sell. We have to be moved by March 1st, so the proverbial clock is ticking. Because our "dream home" doesn't seem to be on the market right now, I'm looking for a rental/flip candidate. In our area about the highest you'll see a rental is about $1,500, so according to the 1% rule, that will cap me at $150k house. A lot of what I'm seeing is $160-$170k, which is beyond the high end of rent in our area. 

Is there a deviation from the 1% as the price of the homes go up? The only reason I ask is because if the goal is cash flow, and the property doesn't meet the 1%, but still has cash flow....what's the big deal? For example, if my mortgage is $1,150 and I can get $1,500 in rent....isn't that the goal?

Or, is it a matter of the 1% rule mostly works because rental homes are being purchased under market value(certainly helps)? I know we all strive for great deals, and certainly don't want to over pay, but the clock is ticking.  I'm not trying to justify paying retail, but if the numbers work...what am I missing?

I look forward to hearing your thoughts, and thank you in advance! 

p.s. Any wholesalers in the Louisville/Maryville, TN area? lol