Surfers Paradise Blog

The one percent (1%) rule has been around for many years. It is a quick generalised rule that can help investors find the most profitable properties.

The concept is to buy properties that produce a monthly rental income of at least 1% of the purchase price.  While this is great in theory, market conditions don’t always support the rule.

Rule Example

If a property is for sale at $500,000, the 1% rule means that the monthly gross rental income should be $5,000.

The main goal of the rule is to ensure that an investor will break even or make a profit from the property.

Generally, the 1% rule is a pre-screening or short-listing tool only.  You also need to factor in the property's condition, presentation, quality of fixtures and fittings, location, capital growth potential, supply and demand, local market conditions, and the suitability for attracting tenants.

Fact or Fiction? …

It is up to you.  It is just a calculation. 

Your decision to purchase any property must consider facts, data, research, professional advice, your personal and financial goals, and your set criteria as a property investor.