The 1% Rule in Real Estate Investing

Tips for Investing in Multi- Family Properties

HI! My name is Michael Zubretsky. I am the owner of CT Cash Homes and have some useful tips for you if you are thinking about investing in Real Estate. The 1% Rule can be useful for evaluating Real Estate Investments. With some quick and easy calculations, Investors can easily screen rental properties to determine the Cash Flow Potential of a particular property. This rule is used to determine if the monthly rent earned from an investment property will exceed the property’s monthly mortgage payment.

MONTHLY RENTAL INCOME > ONE PERCENT OF THE PURCHASE PRICE

For example – A property that costs $200,000 should have rental income of at least $2,000 per month.

1% x $200,000 = $2,000 per month Rental Income

Conversely – If you know that the monthly rent on a property is $2,000 then you can quickly calculate the Maximum Purchase Price.

100 x Monthly Rent = Max Purchase Price

100 x $2,000 = $200,000

Using this quick calculation, you have created an instant guideline where you now know that you can not pay more than $200,000 on this investment property without investigating other fundamental features during your due diligence.

The One Percent Rule in Real Estate Investing can be a helpful tool when you are evaluating cash flow potential, but it is only the first step in determining whether a property is a good investment.

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About CT Cash Homes

Have you been researching how to sell my house fast in your local area? You have come to right place! CT Cash Homes is local and we buy homes for cash! We are a Real Estate Solutions company based in South Windsor CT. We are a third generation family owned business. Our focus is helping homeowners who are having problems with foreclosure, divorce, probate or who just need to sell their home quickly for any reason. CT Cash Homes works with you to provide a solution to your problem.