Will 1% Rule Be A Thing Of The Past?

[Brendan Lawrence]

Hey guys!

I live out in Bend, Oregon where it’s hard to find a single family home under $300k....even under $400k can really limit you!

Same thing with the cities like Salem, Eugene and Portland. Oregon is expensive!!

My question here is what happens when housing prices officially rise to the point that you can no longer find the 1% rule anywhere? A house will rent for $2,000-$2,500 pretty easy but what if none of the houses in town meet the 1% rule anymore? What happens when the whole state finally exceeds it?

I do get that you can still flip these properties and use them in one way or another. But as long as home values keep rising and wages stay the same it’s only a matter of time before rents can’t support the home mortgage of the investor anymore.

Wondering what y’all experienced folks have to chime in with!

[Filipe Pereira]

@Brendan Lawrence

A couple thoughts: 

1. Switch asset class ( go to MFR)

2. Switch markets (CT for example still regularly exceeds the 1% rule on MLS properties)

3. Nothing really happens when the entire state can't meet the 1% rule. It's too vague. Investors will either buy based on hope for appreciation, or they will invest their dollars elsewhere. There are LOTS of places that don't hit 1%. Think of the big cities (Boston, NYC, etc.).. they dream of 1% deals.