Rent/Cost Averages vs Cash Flow

[Bryan Beal]

We started a real estate investing company last year and we were able to purchase and lease out 12 SFR units. I've run calculations to date on all of the properties we own and all of them look strong... With the exception of the rent/cost analysis. Our average came out to be 0.83%. These homes are in great shape, in good neighborhoods with great upside potential. We're cash flowing well on all properties but from everything I've read, the "rule of thumb" is to be above 1.5% in rent/cost. Again, with positive cash flows in emerging markets, that 1.5% seems high based on my experience. My question is - am I missing something? Is that number more suited for "high risk" investments vs buying in established neighborhoods? Any insight would be greatly appreciated!