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Definition of 'One Percent Rule'
A rule of thumb used to determine if the monthly rent earned from a piece of investment property will exceed that property's monthly mortgage payment. The aim of the one percent rule is to have the rent be greater or equal to the mortgage payment, so the investor breaks even on the property at worst. The rule is used for quick estimation, as there are other costs associated with a piece of property that are not taken into account, such as upkeep, insurance and taxes.
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Investopedia explains 'One Percent Rule'
Purchasing a piece of property for investment requires a thorough analysis of future rents compared to the cost of owning that property. Property owners want to maintain a cash flow greater than costs. For example, an investor is looking to purchase a home valued at $200,000, with the goal of renting the home out for income. After placing 20% down, the investor has a mortgage of $160,000. The one percent rule says that the home would have to be rented out for no less than $1,600 per month ($160,000 * .01).
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Search results for 'One Percent Rule'
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http://www.investopedia.com/ask/answers/06/80percentrule.asp
... that James realizes that he did not purchase enough insurance to cover the 80% rule,
so he goes and purchases coverage that covers $400,000. One year passes ...
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http://www.investopedia.com/articles/mortgages-real-estate/08/like-kind-property-exchange.asp
... exchange, an investor is not required to make a one-for-one exchange of ... The
three-property rule - Any three properties may qualify regardless of market value. ...
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http://www.investopedia.com/articles/economics/08/monetarism.asp
... Prize winning economist who once backed the Keynesian approach, was one of the ... Theory
Of Money?) Money Supply, Inflation and the K-Percent Rule To Friedman and ...
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http://financialedge.investopedia.com/financial-edge/1210/5-Ways-To-Save-On-Investments.aspx
... actively-managed mutual funds, it pays to keep the management fee as low
as possible. One percent or lower is a good rule of thumb. ...
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http://www.investopedia.com/articles/stocks/09/less-trading-lower-costs.asp
... As a rule of thumb, an investor hoping to earn double-digit returns should seek
to ... bid and ask prices, it still can amount to one-tenth of one percent per trade ...
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http://www.investopedia.com/articles/exchangetradedfunds/09/tracking-error-etf-funds.asp
... fund is small, perhaps only a few tenths of one percent. ... more than 25% of their
portfolio in one stock ... This rule creates a problem for specialized funds seeking ...
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http://www.investopedia.com/university/fiveminute/fiveminute9.asp
... the broker's regulations nor our trading rule requires us ... The Percent Financed column
shows how much of the ... for each purchase after the second one, no matter ...
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http://financialedge.investopedia.com/financial-edge/0111/5-New-Ways-Credit-Card-Companies-Are-Wooing-New-Card-Holders.aspx
... One combine cash back bonuses with zero percent APR for a ... rewards, some cards like
the Capital One Journey card ... some new exceptions to the no-store card rule. ...
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http://financialedge.investopedia.com/financial-edge/1211/How-Much-Should-You-Have-In-Your-401k-To-Retire.aspx
... For instance, saving 10% of one's annual pre-tax salary ... getting to a double-digit
annual percent is usually a ... A rule regarding asset mix is that the percentage ...
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http://www.investopedia.com/articles/fundamental-analysis/09/assessing-bank-assets.asp
... 3 assets, the FASB adjusted its fair-value, mark-to-market rule. ... Percent Total Assets,
3.7%, 92.3%, 4.0%, One year ago, this bank had Level 3 assets that were only ...
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