The 1-percent rule, monthly rent at or above one percent of purchase price, is functionally extinct in coastal markets but alive in specific Ohio, Georgia and Texas submarkets, if you buy below retail and verify rents honestly.
KEY FACTS FROM THIS GUIDE
- The 1% rule survives mainly at below-market entry prices in OH, GA and select TX zips
- Model taxes with the actual county bill: Texas rates run near double Ohio rates
- Two property-manager calls verify any rent assumption in ten minutes
- DSCR loans qualify on the property rent, not your personal income
Where it still lives
Columbus, Cleveland and Dayton working-class neighborhoods; Augusta, Macon and pockets of south Atlanta metro; select San Antonio and Houston zips. In all of them the rule survives at wholesale entry prices, not at retail listings, which is the entire point of buying off-market.
How to verify a rent claim in 10 minutes
Pull three active rental listings on the same street type in the same zip, then call two property managers and ask what they would list it for. If the package’s rent assumption exceeds what you hear, price the deal on what you heard.
Below-market entry is the whole game. Written numbers, licensed title company closings, zero pressure.
The costs that eat the 1 percent
Taxes (double-check Texas), insurance (rising everywhere), management (8 to 12 percent), maintenance reserve (1 month rent per year minimum), vacancy (one month per 18 assumed). A true 1-percent deal survives all five on paper before you offer.
Below-market entry is the whole game
Buying at 80 to 85 percent of value converts a marginal rental into a durable one: instant equity, refinance headroom, exit options. That entry discount is what a distressed-source pipeline provides.
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