Is the 1 percent rule still a useful first-pass screen, or is it just nostalgia now

The ratio never carried taxes and insurance, and that's most of the spread between markets now. Two houses at identical price and identical rent can be 3,000 a year apart on taxes alone depending on the state and how the county reassesses after a sale. So the first number I pull isn't rent to price, it's what the annual tax and insurance bill will look like for me as the new owner rather than what the current owner pays. That one habit has killed more deals for me than the rent number ever did.

I want a screen I can run on my phone while eating lunch, which is an argument for keeping something crude. But thicket, the version I use now is 0.8 percent instead of 1, and I have no defense for 0.8 other than it's the number that leaves me a list I can actually read.

Still using it as a sorting tool and I know it's blunt. What I've caught myself doing is comparing asking price to my hoped-for rent instead of to what the last three similar houses actually leased for. Those were 90 dollars apart in one case and that's real money against a screen that only has one input.

The question I'd ask before picking a screen is what you're screening for. If you need the house to cover itself from month one, the screen should be your own debt service at the rate a lender will really quote you, not a ratio invented when money was cheaper. If you're buying for a fifteen year hold and can feed it, the ratio matters less than the tax and rent trajectory of the submarket. Two different jobs, two different filters. I lean toward the debt service version because I don't want to be the person funding a house out of salary in a year where salary gets interesting.

I screen on DSCR at the actual quoted rate with vacancy and management already in, because that's the number a lender will run on me anyway. If it clears 1.20 with real expenses I look further. It is slower than a ratio and I have made peace with looking at fewer houses.

On the small multifamily side the ratio behaves differently, duplexes and fourplexes still clear it in places single family doesn't, but they come with a worse expense ratio and tenants who share walls and opinions. My point for this thread is that the rule was calibrated on a mix of property types and everyone kept applying it after the mix changed.

1 percent absolutely still exists where I look. 118k house, 1,250 rent, done. What it doesn't tell you is that the roof, the well, and the tenant pool all come attached, and expenses on a 118k house are not proportionally smaller than on a 290k house. Insurance and the plumber charge the same either way. So I clear the ratio and then lose the margin somewhere between the screen and the bank statement.

hollow, that's the part that surprised me reading about the cheap markets. Fixed dollar expenses don't scale down with price, so the ratio flatters low price points and punishes high ones beyond what the actual returns justify.

Nothing in a rent to price ratio accounts for turn cost. A house that leases at 2,050 and turns every eleven months with a 2,800 make-ready is a worse asset than one at 1,900 that holds a tenant three years, and no first-pass screen I've seen catches that. You only learn it from the leasing history, which sellers hand over reluctantly.

Two tiers for me. Tier one is crude and generous, anything above 0.65 percent survives. Tier two is a full model with taxes reassessed, insurance quoted for real, 8 percent management, and a capex line. Maybe one in nine survives tier two. thicket, the thing your post made me realize is that my tier one number has drifted down twice in eighteen months and I never wrote down why.

I've held houses that never cleared any ratio anyone would endorse and did fine, because the land under them repriced. That is not a strategy I'd recommend to someone who needs the rent, and I'd rather say that plainly than pretend patience is a substitute for cash flow.

Every screen I've used stopped mattering the moment I started asking who the seller is and why they're selling this month. The best two houses I own were listed at prices that failed my filter and closed at prices that didn't. So my honest ranking is seller motivation first, numbers second, and the ratio is just how I decide who to call.