Question about the 1% Rule

[Anastasia P.]

I was reading about the 1% rule today where a property should cashflow at least 1% of the purchase price each month. I wanted to know how does this apply to multi families? Should it be 1% for the entire property or per unit? I just want to make sure that I understood this correctly. Thanks!

[Tim Bee]

Multi family properties should AT LEAST meet the 1% rule. They should actually exceed the 1% rule in my opinion. Maybe be around 1.2-1.5%. A SFR doesn't have all the community items that a multi-unit will have. With a mulit-unit you (the owner) have to pay for yard care, trash and possibly some other community items that eat away at your cash flow. On all my single families the tenant takes care of the yard, pays for the trash and of course pays all the utilities.