🔑You can analyze rental properties without using fancy calculators or spreadsheets.
💰The 1% rule is a quick way to estimate if a property meets your investment criteria.
🏢The gross rent multiplier compares the purchase price to the annual rent to determine income potential.
📉Lower gross rent multipliers are usually better for generating rental income.
📝Use the back-of-the-envelope method to quickly screen potential rental properties.
What is the 1% rule?
—The 1% rule states that the monthly gross rent should be equal to or greater than 1% of the total purchase price.
How do you calculate the gross rent multiplier?
—To calculate the gross rent multiplier, divide the total purchase price by the annual rent.
Is the back-of-the-envelope method accurate?
—The back-of-the-envelope method provides a quick estimate of rental property potential, but further analysis is recommended.
Can the 1% rule be used in all markets?
—The applicability of the 1% rule varies by market and individual investment preferences.
Should I rely solely on the gross rent multiplier?
—The gross rent multiplier is one factor to consider when analyzing rental properties, but a comprehensive analysis is recommended.
00:00Learn a simplified approach to analyzing rental properties without complex calculations.
08:26Use the 1% rule to quickly screen potential rental properties.
09:52The gross rent multiplier compares purchase price to annual rent to estimate income potential.
10:32Lower gross rent multipliers generally indicate better income potential.
10:59The back-of-the-envelope method helps you quickly screen properties based on income potential.
