1% Rule in Canada - is it possible?

[Robin L.]

Hello Everyone,

Hope all is well with you.

Over the past year I have been reading books, watching real estate investment videos, and the 1% rule seems like a common target a lots of investors looking for. It is basically the gross rent should be at least 1% of the selling price.

It is definitely an awesome target to reach, and it definitely will generate great returns. However, I have been looking and looking in BC, Canada, especially in Kamloops, Kelowna and Prince George with No luck so far.

I talked to many local realtors in the areas and asked about the 1% rule, all of them said it is impossible in that market.

So...any suggestion and insights?

PS: I am looking to invest in BC this year, currently I live in Vancouver, with one condo investment. The unit has good potential for appreciation, but cash flow BAD lol

[Edison Reis]

The 1% is typically achievable in USA but in Canada (medium / larger cities) tends to be more around 2% or so. (Keep in mind that most books and podcasts are from USA) 

Having said that, it isn’t impossible mainly if you find a deal in a small town. (BC is out of hand and the most attractive place right now is Kamloops) 

I tend to follow the Canadian REIN rule of thumb of ....

(Rent X 12) / Purchase price

The result needs to be > 7% otherwise is a “No Go” for me. (If passes this basic rule than I proceed with deeper Analysis)

Note: All our properties were purchased following this rule. 

Good luck 

Edison