1% rule and 50% rule

[Fahim Ahmed]

Hi All

Do you follow the 1% rule (gross income must be equal or less than 1% purchase price) or the 50% rule (50% of gross income be allocated to operating expenses) when analyzing deals in Canadian real estate? I feel like given the inflated prices (Southern Ontario anyway) these rules of thumb may not apply here?

thanks for the feedback.

[Scott E.]

The only rule I follow when it comes to these rules... is I don't follow any of these arbitrary rules.

Just underwrite the deal. It doesn't take long and will give you a much better picture as to whether or not the asset performs.