The one percent rule refers to the rent to cost ratio a single family rental investment property must have in order to be profitable as a rule of thumb. While there are a number of expenses to keep in mind, the monthly rent on an investment property must be at least 1% of the total purchase cost to have a positive ROI and be considered a favorable investment asset. In more distressed times we have also experienced common use of the “2% rule.”
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This sizing gives you info about the value of replacement properties you need to purchase and the amount of related debt on this purchase to fully defer your capital gains associated tax liability.
As an added benefit you will receive a comparison of your current income vs potential replacement property income that includes an assessment of income tax benefit between the
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