Reply to $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?

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[quote=Anonymous][quote=bethesdawings]We are thinking about buying our first investment property. Please advise if we should follow the 1% rent rule (rent/purchase-price)?

Our realtor sent us a couple rental properties (townhouse) in Alexandria VA. The sale prices are all around $400K with monthly rental income $2100-$2000. These properties were sold at about $330k in 2018. The price has been increased by $60K-$70k within 2 years. I research the nearby area in VA. Looks like the rent/value ratio are all less than 1%.  For example, in Fall Church, Arlington & Alexandria, a rental property worths $600K is rented for about $3000/month; $400K property is rent for about $2000+.

I simply couldn't find any investment property that can get 1% rent. Are people making money on renting out these $400K~$600k properties? Will the $400K townhouse (HOA $100/month) bring in positive cash flow? We are thinking about getting a mortgage of $300K (2.875% 30 years). The PITI will be around $1400/month.

Thanks! [/quote]

You can get well over 1%... in downtown Baltimore.  Not sure if you are interested in that.[/quote]

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