1% rule to qualify a deal

[Monica Litster]

When I was working with a mentor a few years ago, he told me about a 1% rule. If the rent is 1% or more of asking price, it’s a deal. Has that changed to 2%?

[Hattie Dizmond]

Monica, it's a principle, not a true rule.  What constitutes a deal is a transaction that performs up to your minimum criteria.  You're obviously looking at buy and hold opportunities.  Use the Bigger Pockets calculator for Rental property.  There are also tons of worksheets posted in the Resources section that will help you evaluate deals.

Basically, the 1% rule is supposed to represent a deal that will provide a minimum accepted cash flow.  However, it isn't applicable in all scenarios.  You may be making a play on property with a longer term return in mind.  Set your own minimums and then work the numbers to figure out whether a particular "deal" is a deal for you.