Questions about to 1-2% test

[Dave R Ludolph]

I feel like the easiest way to explain this is with an example. Say I buy a property for $60k and put in $40k in improvements with a total investment of $100k. I then rent the house out for $1000 a month which would meet the 1% rule. So say I now want to cash out refinance to brrr and they value the house at $120k (I'm really good at renovations lol), would I then increase rent to $1200 a month to stay in 1% or since I'm investing the extra financing into another property do I not worry about it? Thanks ahead!

[Dawn Brenengen]

@Dave R Ludolph  Agree with the others.  It's just a quick rule of thumb to see if the property is worth analyzing.  If market rent is 1% of the value, then dig deeper.  Rent is only dictated by the market, though.  You can't just decide how much to charge.  You have to have tenants who are willing to pay that amount.