All Forum Posts by: 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!

The Austin/San Antonio markets are great. With these markets being local I would take full advantage of them before looking out of state. Austin is growing like crazy and because of that, so are the surrounding areas. Round Rock and Leander are great areas with rapid growth and great rental opportunity if you are looking to buy and hold. There are also BRRRR opportunities there with some older homes. If you are looking to buy further South I would look into New Braunfels and Seguin. One thing to be aware of though is how the prices of the homes were decided on and ask if they were appraised.

What do you think about looking at the cities surrounding the areas that you mentioned? For example, New Braunfels is South of Austin and growing quickly but it doesn't have the same Austin prices. They are getting there though.