Is it possible to cashflow with 5% down payment on home? 1% Rule?

[Mike M.]

Hey all,

I have a couple questions in regards to what should be my strategy going into my next house purchase. In the house I live now I was fortunate enough to put a significant amount of money down (35k) and purchase the house for 175K. PITI+HOA fees = 900/month and can easily rent the place out for 1500 to 1800 a month. Currently I live in this house and just go prequalified again for a primary residence through my lender and want to take advantage of the low interest rates.

My question - is it possible to put 5% down on a home and expect to cash flow 200-300 a month a year later when I plan to move out and rent the place out? Going through a realtor and searching the MLS makes it hard to find really killer deals so I'm confused on where I should go from here...but I really want to take advantage of the low interest rate market.

And is this a good strategy? Thank you :)

Also, in reading I see that the 1% rule is one that many investors live by, well in the Scottdale and Tempe areas that is going to be very hard to come by. A home for 215k could rent out for 1500 a month possibly. That equals approx. .69% percent.

I live in the Phoenix area btw. I would appreciate your thoughts!