The 1% rule
This rule states that when buying a property, the goal “should” be to have monthly rent be at least 1% of purchase price. Ex: If price is $220,000 you would want rent to be at least $2,200/mo.
The 50% rule
This rule states that on average, ~50% of total gross income “could” go towards expenses, not including mortgage payment. Ex: With $2,200/mo rent, ~$1,100 “could” go to expenses such as taxes, insurance, vacancy, large repairs, utilities, mgmt/maintenance etc.
The 70% rule
This rule states that if a property needs a lot of rehabs, an investor would aim to have total cost be ~70% of the after-repair value. Ex: If rehabbed property is worth $250k? An investor would aim to have total cost, including rehab be at or below ~$175k.
NOTE these guidelines WILL have variance & these are VERY general ways to help new investors begin analyzing. Each property/investor is unique and will have their own set of criteria & goals*
source twitter ficouple
