Is The 1% Rule Dead? With John Brooks (Ep 339)
Rental Income Podcast With Dan Lane
Rental Income Podcast
4.8 • 836 Ratings
🗓️ 2 November 2021
⏱️ 23 minutes
🧾️ Download transcript
Summary
We also talk about the 1% rule, and if this is still a good benchmark to evaluate rental properties, and other factors that investors should consider.
Transcript
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| 0:00.0 | inspiring interviews with today's top landlords this is the rental income podcast and now dan lay john |
| 0:09.7 | when someone wants to invest in a rental property finding a good area to invest in is really important |
| 0:15.2 | what do you think some things are that people should be looking for when they're trying to choose an |
| 0:20.4 | area to invest in. |
| 0:21.7 | Look for areas that are bringing in the jobs. I think that's one of the key factors for |
| 0:26.7 | Hunts, Alabama here for the last few years, that have really attracted a lot of out-of-state |
| 0:31.7 | investors, but also a lot of people just moving here. I mean, they're moving here for the jobs, |
| 0:35.4 | they're moving here for better quality of living, taxes are low. So that's another thing I would look at is where rich regions of the |
| 0:42.6 | country have higher or lower taxes. Of course, schools are always a great factor. And so we've |
| 0:49.6 | really focused on building either brand new schools or expanding our schools, education, growing or not |
| 0:56.1 | growing. Certainly if a city is growing leaps and bounds, and that means there's going to be a lot of |
| 1:00.4 | people relocating there that may not be interested in buying but would want to rent. The problem is |
| 1:06.2 | when you find an area that has good jobs, good schools, and is growing, and you combine that with historically |
| 1:12.9 | low interest rates and a housing shortage, it means prices are going to start going up, and |
| 1:18.6 | it makes it very difficult to find really good deals on a rental property. A benchmark that a lot of |
| 1:24.5 | investors use is called the 1% rule. If you're not familiar with that, it basically means that if you buy a property, you |
| 1:31.3 | want it to rent for 1% of the purchase price. |
| 1:34.6 | So if you were to buy a property for $100,000, you want it to rent for $1,000 a month. |
| 1:41.6 | And if you follow that rule and you buy a property in a good neighborhood, |
| 1:46.2 | the property's in good condition, you have a pretty good chance that you're going to actually |
| 1:50.5 | be able to make a profit on it. The problem today is that the 1% rule is getting really |
| 1:57.0 | difficult to find in a lot of areas. So how can you invest if you're not able to meet the 1% |
... |
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