Clarity

The 1% Rule Doesn’t Work Here — Now What?

The one percent rule is the old landlord yardstick: a rental should bring in about one percent of what you paid for it every month. Here is the objection I get about it, almost word for word.

“Mark, your one percent rule does not work where I live. The cheapest house you can get here is three hundred to five hundred thousand dollars, and nobody is going to pay three thousand to five thousand dollars a month to live in the cheapest house in the area. So it does not work where I live.”

I spent most of my college life skiing. There were always people on the black runs who had no business being on the black runs, and it hurt them. The mountain was not wrong. The mountain was not going to change either.

So maybe you should not be buying and renting properties in that market. Not because you are not smart, but because doing it there is not smart.

The rule is not broken. It is telling you something about that market, and you are arguing with the messenger.

Mark HopeLife Coaching