1% rule vs cash flow

[Victoria S.]

On a couple of properties we are close to the 1% rule but they are good duplexes in great areas ($100-200 off to meet the 1% rule). And once the leases are up we will raise the rents. All our properties meet our goal of 10% cash on cash (accounting for 5% vacancy, 5 % maintenance/cap ex). How strict are you guys on the 1% rule? Also, are my cash on cash criteria too lax? I know we should likely put 10% for maintenance/cap ex.

Right now we are averaging $300-450/door. 

[Corby Goade]

I wouldn't worry about meeting any of these "rules of thumb." Does the property help you achieve your personal goals? Are you getting closer to your end goal, whatever that is? Is the property a burden or are you happy that you own it? Of course you need to make money, but if the property is doing what you need it to do for you, don't sweat the small stuff. 

But yes, you should be saving for capex, and ideally, that should come from your rents. We put aside $X per door, rather than a percentage. 

Good luck!