The 1% Rule

The 1% Rule is a fast way to screen a deal before you spend hours underwriting it.

Here's how it works: compare the purchase price to the property's gross monthly rent. If monthly rent is roughly 1% of the price, the deal clears the first screen.

Example: a $1,000,000 property should generate around $10,000 a month in gross rental income to hit the 1% mark.

In today's market — especially here in Palm Beach County — hitting 1% on a stabilized small apartment building is rare. Prices have run ahead of rents across most of the county, so don't rule out a good property just because it misses this number. Use it as a first filter, not a final answer. A property well below 1% needs a closer look before you spend real time on it; a property at or above 1% still needs full underwriting before you make an offer.

This is general information, not investment advice — always run your own numbers or check them with your advisors. If you're evaluating a small apartment building under 100 units in Palm Beach County and want a second opinion before you dig into the full underwriting, I'm happy to take a look. No obligation.