Care to share investment criteria in pricey RE areas?

[Ethan McRae]

Right now I am looking for property to buy in the Boston area. When looking for properties I tend to try to find ones that meet the 1% and 50% percent rules however, its very difficult to find properties like this.

I have analyzed a few properties that dont quite meet the one percent rule but seem to cash flow. However, I am a bit hesitant about going for properties that don't meet the one percent rule because I've heard many investors say that you are doomed for failure if you don't meet that rule.  

I was wondering if anyone that lives in some of the more expensive areas like Boston or California cities would be willing to share how they go about looking for properties. What rent to price ratios are acceptable for you?

Does anyone settle for .8%? Less? If so, whats your logic behind your criteria? Thanks!

[Lien Vuong]

Boston is closer to .75% and to @Mark Mahoney's point it's ROI. You have to evaluate this by the areas you're looking in. Boston metro will be one of the most insulated market in the country so you have to consider that. Because I bought 'right' and in market I know well, my 60 units are 100% paid up in April's rent cycle. You have to look at the macro picture. Appreciation in Boston is RIDICULOUS and the tenant class you have for these areas are going to be much stronger than other markets.

Cash/cash, appreciation, and value add are great factors to analyzing deals in A markets. 

If you're specific on the 1% rule you can also explore suburbs of Boston 30-40 miles outside that would still be a good area with more attractive entry prices. Those definitely exist, just probably not at purchase. I can think of two properties in the last two weeks that past 1% rule at purchase that was on the market.