Is the 1% rule that important?

[Kate Cavanaugh]

I’m currently in the market to purchase my first property with the intention to homestead, live there for a year, and then rent. I am having a hard time being able to follow the 1% rule! The rule says the gross rent of the property should equal at least 1% of the purchase cost.

Is this something real estate investors swear by? The property I’m looking at is a brand new tract home in New Braunfels, TX. The house is in the highly desirable Gruene area. The expected gross rent is more like 1.5% of the purchase price, including closing costs.

Another thing, I’m not seeing the 1% rule really applying in this market on other homes either so I’m curious to know how important it is!