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Updated about 4 years ago on . Most recent reply

Is the 1% rule a "must have" for a smart multifamily investment?
Hi All,
First time posting, and really, new to RE investing.
Is the 1% rule a "must have" for a smart multifamily investment?
Considering a multifamily investment (2 Units, 1/1 down, 2/1 Up) listed for $600k in a "B" location. Conservatively, expect property can rent for 3800/m. Based off the 1% rule, this property falls well below at .63% which based of the fundamentals of the 1% rule says this property will never be cash flow positive.
But when i do my own analysis, the property seems to make sense, clearing $745/m NOI. (analysis below)
I guess my question is, should I really be looking for "better" deals? My goal is not necessarily cash-flow, but rather building wealth over time. Cash flow obviously helps though.
Any thoughts or feedback is welcome. Just starting out in this and looking to learn (and not make a bad deal as my first :))
Upfront Cash Investment | $161,979 |
Dist. Cash Flow Per Year | $8,944 |
Dist. Cash Flow Per Month | $745 |
Dist. Cash Flow Per Unit / Month | $373 |
Cash-on-Cash Return | 5.5% |
5-Year IRR (not adjusted for taxes) | 17.4% |
Most Popular Reply

I also didn't hit the 1% rule, but one side is able to cover the mortgage and property taxes. That works for me and my goals!
In my little experience, you'll know when you find a good deal. Research other deals and you begin to pick up on the average return in specific areas. Good luck!