With today's interest rates, you can’t overspend because your principal is going down so rapidly. Do I have to choose between appreciation and cash flow? In Philly, that’s nearly impossible and with investors getting 2.875% interest rates, definitely not necessary. The 1% Rule says that an investment property is a good deal if the total gross monthly rent is 1% of the purchase price that’s a $200,000 property earning $2000/mo in gross rent. Because Philadelphia has affordable rents, you can forget Google’s recommendation that anything other than a 10 cap will do, and adjust that 1% formula down a bit. Traditionally, investors would use a Capitalization Rate or the 1% Rule to determine a good buy. So when a new investor says: “I want to generate passive income and find a cash-flowing, turnkey property that follows the 1% Rule.” We say, with a little adjustment of that expectation, I can turnkey that dream into real estate. Is the 1% Rule of investing possible in Philly? So, why now? Because rates for investors are at record-breaking historic lows, and values are predicted to continue rising. New investors entering today's market can expect limited supply and off-the-charts demand, sticker shock at the steadily rising prices, poor cosmetic and physical conditions, and acquiring long term tenants paying below market rents. The reality of dipping new toes into the investment market can be challenging and frustrating. That initial excitement is legit because the Philly rental market is solid, stable, and constantly growing. They share our excitement for chatting, real estate and speculating on trends about rents, interest rates, and neighborhood development projects.
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