Why I’m Passing On This 1% Rule Rental Property ($15K/Year Cash Flow) | Bigger Pockets Video

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Would you pass on a 1% rule rental property that could make you $15,000 per year in cash flow? You wouldn’t? Well, I would, and I did, and today, I’m telling you why.

The 1% rule is a quick screening metric for rental properties that says if your monthly rent is 1% of the purchase price of the house, you’ll most likely have cash flow. And that’s true…sometimes. But it’s not ALL about cash flow. Focusing too much on cash flow could cost you.

I had a killer deal sent to me by my agent. It hit the 1% rule and had solid cash flow, but I passed on it. Even though it beat most other rental properties I looked at, there were some glaring red flags I couldn’t ignore. I even flew out to this property before I realized that I didn’t want to buy it.

The question is, if you were sent this deal, would you have made an offer?