The BetterLife Podcast: Wealth | Real Estate Investing | Life
Want to Get into Real Estate Investing? You HAVE TO Know these 3 Terms | Ep. 104
Dec 13, 2024
Dive into the essential rules of real estate investing! Discover the game-changing 1% rule to gauge rental income effectively. Learn about efficient cash flow analysis with the 50% and 70% rules for smarter property evaluations. Explore quick estimation techniques to streamline your property search and make informed decisions without the hassle. Plus, find out how virtual assistants can boost your productivity in managing investments!
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Quick takeaways
- The 1% rule helps real estate investors quickly evaluate rental property viability based on the correlation between rent and total investment.
- The 70% rule aids property flippers in determining acceptable purchase prices by focusing on after-repair value minus renovation costs.
Deep dives
Understanding the 1% Rule
The 1% rule serves as a fundamental guideline for evaluating rental properties. It suggests that the rent should equal at least 1% of the total investment in the property, which includes the purchase price and any necessary rehabilitation costs. For instance, if a property costs $120,000 and requires an additional $60,000 in renovations, the total investment would be $180,000, necessitating a monthly rental income of $1,800 to be considered viable. This rule helps investors quickly assess whether a property has the potential to generate positive cash flow, although it's important to consider local market conditions and other factors that may affect rent-to-price ratios.
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