Quote from @Anita Morrish:
Hi Victor,
I really appreciate your input on this with your knowledge cause I’ve been struggling. Our strategy right now would do owner occupancy (conventional loan w/ 5% down) for about a year or so then turn into LTR in nicer neighborhoods-all the houses are around $250k right now. I struggle with the .65 or so rule your describing because rent won’t even cover the mortgage. What’s your take on that and what would you be looking for in this situation? Thank you!
I don't think the 1% rule was ever intended to work with a 5%down payment, and that is why it has gone off the rails. Whoever and wherever it was invented, I think there was a built in assumption of at leat 80/20 LTV. It didn't just stop working because of rising prices, it stopped working when we all convinced ourselves that no and low money down strategies went hand in hand with positive cash flow.
You can back the math into whatever down payment would be required to get to the 1% rule. And make raising that down payment your goal, or living in it until you get the mortgage paydown to a place where you can make the 1% rule work.
