Question on 1% rule and qualifying a good deal

[Will Mobley]

So I’ve been reading ”How to invest in real estate” and just finished the section on the ‘1% rule or the 2% test’

I was looking at a potential 3 BR/ 3 BA unit in a college town that is rented through July 2022 at $1,425/month and renewed at $1,500/month through July 2023

Listed at $212,900

After 20% down, estimated total monthly costs (mortgage, property tax, insurance, HOA) are $1,212

So even though the $1,425 doesn’t equal 1% of the asking price but is greater than expected monthly costs is it still a bad deal?

sorry for sounding clueless just new to this and trying to learn!!

[Joe Villeneuve]

The reason why you're confused is because these dumb rules have no meaning.  They tell you nothing, so how can you interpret anything of value, and make a decision from it?

Let me ask you a question or two, or more:

1 - After all of your calculations (with numbers using $$$ in front), what will your monthly cash flow be?

2 - How long in years will it take for your cash flow to equal the down payment you personally paid in cash (only)?

3 - What are your numbers (in percentages) when calculating for the 1 and 2% rules?

4 - If you were presented with the answers to the three questions above, which one(s) tell you something of value, worth making a decision from, and which one(s) don't?