1% rule way more work and less profit?

[Mike S.]

Seems impossible to get 1% in booming cities like NY, Boston and San Francisco... in Boston you are lucky now to get 1/2%. Maybe with development you can get 3/4% but its hard. I often think about the places that get the 1% or more and feel they are a lot more work and with very little to no appreciation. The appreciation you gain in just a few years in one of these mentioned cities may equal the total "bonus" cash flow you get renting out a 1% rule home for 10 or 20 years?. If this is the case I don't see the sense. what I do see is that not everyone has the money to buy "big" in places like In Boston which 500k is a purchase price starting point and although you just get your 1/2 % your making a killing on the short term appreciation. For areas far outside the city (the 1 % or more places) your starting point can be only 50k or so and your pulling in that "bonus" cash but it seems like so much more work, more/tougher tenants, more reno etc.... Just my guess.. .curious what others think?

[Thomas S.]

I always laugh when I read posts about investing this way or that way being "the" way and I admit I do the same.

The reality is it depends mostly on the each investors initial financial situation and their goals in investing.

Some invest as a means to earn a income, others invest to grow wealth. Those starting investing for income need monthly positive cash flow to put food on their table to feed their families and pay for their investment. They do not have deep pockets to supplement a tenants rent or to buy cash flow with their own money.  Why would they pay cash in advance to generate monthly income, seems counter productive. If they already had the cash they would be investing to grow wealth. They depend on cash flow to pay bills and grow wealth simultaneously , all be it slowly.

Those starting with the goal to grow wealth can invest in over priced areas where descent rent to property price are unattainable. They can pay cash to create the image of cash flow and supplement that cash flow out of pocket since income is not necessary to support their life style. They already have a sufficient level of wealth to afford this option while speculating on appreciation. In areas where appreciation is historic the level of speculation is minimal, the ability to grow wealth almost a certainty. When buying groceries is not their goal in investing why mess with table scraps in the form of positive cash flow. 

 Is there a right way and a wrong way, a good way and a bad way. Obviously not since the method chosen is specific to a individual investors perspective, needs and goals. To disrespect one method over another is hypocritical. I have in the past, and likely will in the future, be hypocritical. 

However both options for investing (only two of many) have the potential to achieve their personal goals. Both are investing their right way.