1% Rule: Why You Need to Know this Real Estate Tip: Learn if a Property Cashflows!

[@CanadianRealEstateChannel]

I'd love to hear in the comments - Can you get 1% in your market? What other rules of thumb do you use for real estate investing? If you got value from this video please SHARE on SOCIAL! Thanks!

[@CanadianRealEstateChannel]

Forgot to mention - Jeff Wybo and I will be live this Friday at 5:30 EST to answer your Real Estate Investor and Agent Questions! So make sure you hit that notification Bell!

[@delas7389]

Not here in California, a 4 plex property around here is about 7-800 and my rents would be around 4500 a month before expenses.

[@opaque6633]

In Brampton on the 1% rule is impossible most townhomes are about 550k-600k

[@GrahamStephan]

Awesome video! That Like ratio, too!

[@CanadianRealEstateChannel]

Thanks man!

[@Lj22]

Graham, let’s get Matt on the coffee hour . That will be dope.

[@raczyk]

Wish I would have found this info and you've have posted this 10 years ago. That would have made a world of difference.

[@CanadianRealEstateChannel]

Haha - I wish I would have found it sooner too!

[@jessicaburroughs5763]

You know what.. this SIGNIFICANTLY helps me! I have been trying to gauge how to determine at what point a house is a good deal, or at what point I should make the leap to real estate investing considering my rent is currently cheap af, and my mutual funds are bullish going into the 'golden quarter' of the year. This helps me analyze. Heard it before, prob watched this video before but it clicked how I could use it watching this time around. Thumbs up! :)

[@CanadianRealEstateChannel]

Thanks Jessica!

[@jessicaburroughs5763]

@@CanadianRealEstateChannel PS You can still get 1% in my market. Maybe not on MLS, but definitely if you're quick on the draw or have the capital to rehab.

[@cit1st]

You've mentioned here (and in other videos) that the closest 1%/cash flowing properties could be up to a 4-5 hour drive away. And from what I've seen, this is almost the EXACT distance from me (Southern California) to the nearest potential rentals. 100% accurate.

[@CanadianRealEstateChannel]

Thanks Aaron -appreciate your input and observations. You seem like the sort of person that finds solutions and not problems 😀. Some people in your situation would be like - Actually with Traffic it's 5hours and 15mins from where I live - so this is all fake blah blah blah. Haha. My comment section is the best ❤

[@milton7285]

It’s a lot of patience and hard work. Great points toward the end of the video addressing complaints! -Mi

[@CanadianRealEstateChannel]

Thanks Milton!

[@jting1111]

Amazing content as always ! Thanks for all the great info !

[@jeffminnesota7376]

Good starting point I house hack and my area is 1.06 percent. I live for free plus cash flow of 233 month.....but from the get go 20% down and my Piti was covered by rent. 5 yrs later cash flow 233 live free. Raise rents at least 3.5 percent yr....or keep up with market. Find a 2 % property cash cow lol.....600 rent divided by prop value 30k there are some within 35 miles....you get zero appreciation so it's all cash flow only.... Great video..... Just think find 4 prop 2% you just replaced avg job income

[@CanadianRealEstateChannel]

Thanks for sharing your experience! That's awesome that you house hacked so effectively! I'm planning on doing a whole video series on the topic - what got you interested in the idea?

[@jeffminnesota7376]

Matt McKeever what got me interested in house hacking, wanted to try and live for free and save more invest more and retire early. Currently work pt only do to living cheaply but my duplex is located in a b plus area....2 br avg 825. 3 br avg 950 to 1000. Hour south of mpls.... Just raided rent 5.5 % this yr....just keeping up with mkt. thanks for replying look forward to new video.

[@dominiquechenard8917]

Works for us! Our rental property is currently in our basement, but I'd say it fits the 1% rule if we were to independently assess the value of the rental unit :)

[@Oracle2002]

I feel 100% smarter after seeing this Matt - Thank you sir

[@concertedreaction]

I'm in Victoria now about to move to Vancouver, both are inflated and difficult to find good deals in. That said I see lots of deals nearby in the interior of BC and pretty much anywhere on Vancouver Island other than Victoria. And occasionally I'll see a deal nearby as well :P

[@CanadianRealEstateChannel]

Thanks for sharing your perspective and experiences! I know the lurkers in the comment section (and of course I) appreciate it!

[@PallesCrazyRooms]

Awesome Video, I didnt know that this was what I was doing, but I was looking at costs on properties in my local area, and then moved further and further away, till I found an area 1,5 hours drive from where I live that made sense, the property it is around 1.1% excluding utilities, they are paid by the tenant seperately. I do only want cashflowing properties, I really dont understand why investors buy properties that only pays down the mortgage and has no cash buffer for further investing. A bit risky to only rely on appreciation and future increase in rent to make money. Keep up the good work!

[@malawigold747]

How do u find private sales ?? What are pocket listings ?

[@FloridaRealtor333]

Great videos!

[@perpetualdividends6719]

I'm looking at an 8 unit (2 bedrooms) multi family in Chilliwack BC. Listed for 1.845M. 103G in annual revenue. My math suggests I shouldnt pay more than 1.2M. Looks like I misewell keep buying dividend stocks for now. Easier to manage, same yeild and same chance for appreceation??

[@mtran66]

It will be interesting to look back at this down the line as your properties appreciate to see how the rents scale with respect to the house value

[@nothingbutthebest3051]

Matt love the videos, great resource.... when you are considering expenses to evaluate the 1% rule are including cap ex, repair budget and vacancy as well? If so I need to look harder!

[@mkmac909]

you make good high quality videos and explain things well. i found the orec meeting just today and ill be there. going to eat up all your content over the next week. im closing deal #2 in june. im just discovering this investor community and im learning a lot.

[@CanadianRealEstateChannel]

That's awesome Alex! I hope you enjoyed OREC2018!

[@mlambert1974]

Another great video, thanks!

[@CanadianRealEstateChannel]

Thanks for the support!

[@TheRixguy]

Hey Matt the cash flow it's going to depend on percentage down for mortgage expense. What percent down payment do you do your numbers with for the 1% rule?

[@CanadianRealEstateChannel]

20% down

[@jacobkimes587]

Hey do you have any real case studies about yearly maintenance and/or scaled maintenance costs as your portfolio grows

[@CanadianRealEstateChannel]

I only have my experience and that of other landlords I've met - but it's a good question - I should map out my thoughts/experiences and do a video series on maintenance and property management and contractors as those questions are always coming up.

[@elrey2034]

Great Video Man! Great information always

[@CanadianRealEstateChannel]

Thanks for the support!

[@jordanclermont1986]

Keep up the great videos they've helped me so much.

[@CanadianRealEstateChannel]

Thanks for the support!

[@bearddaddygaming359]

Great video, thanks for the explanation! Really dig your style of explaining so I HAD to subscribe!! I’m in Southern California and looking to invest here in Cali but I’m honestly thinking of going east at Least 3/4 hours where the real estate is cheaper.

[@CanadianRealEstateChannel]

Thanks for the support!

[@Speedy10000]

Heyooooo! Love your Ish brother , How does it work for this rule If they are paying the utilities. .?

[@KellanJames]

1% rule for the win! No matter how much I learn & grow, I always come back to the rent-to-purchase price ratio.

[@CanadianRealEstateChannel]

It's so handy, plus aiming for total asset cost of .70-.80 cents on the dollar (aka post reno 80% cost vs ARV). Those are the two biggest rules of thumb I can think of.

[@ancestordagogo4464]

Nice video. I have learnt a lot. Helped me advice my clients and made better decisions watching ur channel and am way up in Lagos Nigeria. Tnx Matt. What do you think about real estate out side ur Continent ?

[@CyndiLH]

Can you help me figure out after buying another home, whether I should sell my current one and pay off the financing on the new property....or rent my current property and use the rent to help pay down the financing on the new house? I'm in Calgary. thanks!

[@tammyhensley3575]

My houses values at 250k and we rent them for $1,695. Taxes are high too. But I like to have my properties in my neighborhood. I wouldn’t feel comfortable going out of state.

[@ctothej870]

Thanks Matt I really like your videos and hope to be in a good position to buy my first BRRRR property within a year, or so.

[@patrickh613]

I am confused about this because when looking at rental properties for single family homes in my area with a 5% down payment the cash flow is still positive by $200 but im not reaching the 1% criteria. I am getting equity and positive cash flow still. Comments, advice?

[@chachee15]

My question is is it only the purchase price? Say you had to pay 50k for rehab, do you add that to your loan total and go off of that amount?

[@jacobkimes587]

And talking about property management options

[@CoryMacVie]

Excellent video

[@CanadianRealEstateChannel]

Thanks Cory!

[@honestly101]

Thank you very much Matt really appreciate it

[@CanadianRealEstateChannel]

Glad you enjoyed it!

[@Jonathan-xn3rp]

Uploading to quick 😂 i cant catch up on other vids Its a good thing though keep up the good work

[@CanadianRealEstateChannel]

😂 Thanks man!

[@abdullahrubiyath]

Incredibly difficult to find properties that follow 1% rule in major cities in Ontario. I only found it in Chatham. In US, its easily possible for find 1% and even 2% in non-major cities.

[@sunnyday6749]

Hey Matt! 1% rule certainly doesn’t apply for GTA. Which cities in Ontario do you think might still be able to apply this rule? Apparently Waterloo is also out of the picture?

[@markcampbell7965]

What are the chances you'd be willing to do a start to finish analysis off an MLS property on the east coast as in nova Scotia or new Brunswick

[@CanadianRealEstateChannel]

I'd be interested - but without really knowing the market and/or seeing in person I'm not sure how accurate/valuable my analysis would be... But Jeff and I have toyed about touring and making a series of videos of us getting crash courses form locals and learning their markets and trying to implement our methods - but currently we need a lot more subs/attention to justify the cost outlays #firstworldproblems - thanks for watching Mark and good luck with your investing on the east cost!

[@markcampbell7965]

I was thinking just along the line of how you do your numbers what the deciding factor of yes or no if it's worth a look so on but I thank you just the same your channel is a very useful tool in the education process just wish there was more on the numbers percentages and tax strategies for Canadian real estate investors there are loads for the USA any how thank you again

[@raol1991]

Its good video but in toronto gta its not possible. mostly homes are $700K but rent is like 4K a month. correct me if m wrong.. I am planing to buy house soon but just scared that if I wont be able to rent it for more thn 4-5 k a month.

[@Charliebrowndobe]

Hey Matt, what is the least amount of profit/cashflow your looking for or are willing to take per door/unit? in the London area? can you get $100+per door is this on the high or low end. Thank you

[@CanadianRealEstateChannel]

It's very situational and dependent on the exact area and what your investing goals are. But talking in generalities - it is possible to get cashflow of $100mo or more in London - one thing to be aware of is that a lot of people calculate cashflow differently. So I personally would be looking for CF of $100/mo per door or more (usually) and the CF would be taking into consideration all costs + estimate for R&M and vac allowance. Though sometimes I'll refi at a point where it reduces the cashflow (it's a tradeoff between access to cash now - for another project or monthly cashflow - it really depends on a persons priorities and investing style)

[@crb4059]

Texas is very easy to land 1% property, in fact many Ive bought was near 2%

[@CanadianRealEstateChannel]

That's awesome! Is that throughout Texas or just certain markets?

[@crb4059]

@@CanadianRealEstateChannel San Antonio, not there anymore (wonderful rental market), now in Orlando Fl, harder to find 1% here, but DOABLE thanks!

[@Walina1001]

So I tell a private seller that I will pay 1% of their rent and they say DEAL! But the property is in a 2% market so it was only worth $50,000! Screwed out of $50,000! Where's my cash flow NOW?

[@Speedy10000]

Your my new time killer at work Ford Motor Company [watching and listening while on the line; your my new top 2 watch! Anything on Q the great awakening I’d love to get in touch and pick your brain on some potential London purchases

[@therebelminion248]

So I always went with it being 1% of what the mortgage is. So usually 80% of the purchase price.

[@CanadianRealEstateChannel]

Interesting - Did your properties still cashflow at that rate? What market are you in?

[@therebelminion248]

Well, that's a more complicated question. Like you, I use the 1% rule for doing a quick and dirty assessment to determine if I should do more research. If it is even close, I usually will at least take a few more steps to get some detail. I would say it has worked out for me... but yours is definitely easier. I mean, it is way easier to ballpark 1% of $200k than to figure out 80% of $200k then calculate 1% of that. Keep on keepin' on.

[@shantanusood1989]

1% on what? On my initial expenses (down payment and closing costs) or on the entire property value. For example if I buy a property for$230,000 and buying costs were $60,000, expenses are $1000 and ?I am getting rent of $1600 per month then I am making $600 monthly on cash on cash, which is 1% of my investment (not the property value which was $230,000). So does that follow this rule?

[@clarkinjk]

Investing in Windsor Ontario 1.6% and 1.3% on my current rentals

[@collinbristow7228]

Nice videos, can you point me to some wholesalers in London, Kitchener/Cambridge or Windsor?

[@CanadianRealEstateChannel]

Dm me on instagram or FB and I can tell you about some private wholesale groups etc

[@brentpeterson7744]

I’m trying to grow my portfolio as fast as I can. Me and a long time friend of mine have been investing in Orillia but the 1% rule no longer applies here and cash flow seems to be a thing of the past. We have started looking else were for cash flow. It’s interesting that people who invest claim they won’t invest outside of their own area or in anything more then “30 min” away. If I could I abviously would. Thing is that those days are over where I live. I’ve been a property investor for almost 5 years and working on my 5th property not including my house and I won’t slow down because my neck of the woods has become stagnant. There are still huge plans to grow this portfolio but in order to do that I am finding myself 2 hrs away.

[@GeneralA6]

dmn its so nice for you guys to have such great rental fees to property value ratio. here in israel we can get 0.2%-0.3% ratio. sad story :(

[@CanadianRealEstateChannel]

That’s crazy! Have you considered investing out of country? Or short term rentals?

[@GeneralA6]

@@CanadianRealEstateChannel actually now i am considering investing abroad after watching your videos. the problem with investing abroad is the physical distance from the property. what could you suggest me in that situation?

[@CurlyWS]

How is this possible in the UK? a £150,000 property would do well to fetch £750 a month. The 1% rule would mean it would need to fetch £1500 for it be worthwhile according to this rule. That's a 12% yield!! You only get that with houses with multiple families in them here and these require a lot of work to keep going. Are these sort of yields possible over there for normal single family homes?

[@CanadianRealEstateChannel]

Great question Christian... In North America a lot of say - if you can't find the 1% rule in your city, almost guaranteed within a 4 hour drive is a real estate market that does... Maybe that hold's true in Europe to? In regards to your 12% yield (that's only gross yield as in NA at least landlords pay taxes, repairs, insurance, and sometimes utilities etc)

[@adammcallister8120]

I live in Winnipeg and have stated making offers to purchase my first rental property. Even with offering 15% below list price I haven't seen any places that would satisfy the 1% rule. Does anyone else have experience with this in Winnipeg? I know there are some bad neighborhoods where this is possible but I'm trying to avoid these.

[@fsa4680]

Matt, I live in a different country where most of the properties that I see don't even come close to the 1% rule (more closer to something like 0.3% rule). I am emboldened by your video, and I will look harder, but if nearly all the properties are way below the 1% rule, does it mean that the properties are overvalued and I should invest in other assets? To make matters worse, the interest rates are higher and with the new regulations in place, I have to pay at least 50% down payment to a home.

[@CanadianRealEstateChannel]

Hi Fred, that sounds like a tough market to invest in... Without knowing your market well - it's hard for me to give specific advice - but if RE cannot produce the sort of return you want - then I don't think you should invest in it. Perhaps you can invest adjacent to the RE market? Hard money lending to flippers or other real estate investors? Or perhaps there are profitable REITs that you can invest in? Out of curiosity what market are you in? (European?)

[@fsa4680]

No, South Korea. South Korea is one of the most densely populated countries in the world (especially in the Seoul area), which drives up the cost of the real estate to astronomical proportions compared to people's income. A median monthly income in South Korea is roughly $2,000, but the average price of an apartment in Seoul is roughly $500,000, which really makes no sense to me. I'm renting a two bed-room property for $800 right now, but to buy this property would cost about $250,000, which is why I'm opting to rent instead of buy (and investing my money in an index fund). I was always skeptical about buying here, but your 1% rule was pretty much a nail in the coffin. To make matters more complicated, South Korea has a unique system known as "jeonse." This stuff only exists in South Korea, but I think you'd be interested in hearing it since you're a real estate guy, and you have a some time in your hands (haha). It's kinda weird, so I'll try to explain it to the best of my abilities. Jeonse is a lump-sum of cash lent to the landlord in place of rent throughout the duration of the rent, usually about 50~70% of the market value of the house/apartment. So if there is an apartment (There are basically no houses in Seoul, only apartments because it's so densely populated) that has a market value of $200k, the landlord typically accepts rent OR Jeonse, which would be priced around roughly 100k to 140k. The advantage of the Jeonse for the tenants is that once they give the lump sum to the landlord, they don't have to pay rent for 2~4 years, which is a typical duration for Jeonse. At the end of 2~4 years, they get the lump sum back. The upside for the landlord is that he/she has an interest free capital that they can invest for the next 2~4 years. So upon receiving the money, the landlord can buy another property for 140k, or down pay two properties for 70k, etc. The only caveat is that he/she must pay back the tenant within the allotted time, which really shouldn't be a big deal since you can extend the jeonse, find another tenant that wants the jeonse or borrow money from the bank until you find the next tenant, using the apartment as a collateral.

[@ivalterbaptista2305]

No property in Kitchener/Waterloo fit this 1% rule. The prices have just sky rocketed in the last 2 or 3 years. I bought a Townhouse here in KW couple years back and was break even at the end of the month with a tenant but now the tenant is leaving and i can charge more for rent. Now i'm cash flowing $500 bucks a month. Not much but something. Also the house went up 130k in value. You don't need the 1% rule to be successful.

[@taylorseers]

Chatham, On!

[@Lambdamale.]

Bought a condo for 60k last year. Its rented for 700/month.

[@CanadianRealEstateChannel]

Sounds like a great opportunity! 1% Rule FTW

[@taltezy2941]

What about condo fees?

[@Lambdamale.]

@@taltezy2941 At the time I bought the rent covered the overhead. But today??? Not a chance. I would have to fork out at least 200/month to cover it all

[@levyschwartz6894]

Do you think it's worth if rent is $2000 & utility's are on average about $175 you should charge $2175 & Advertise with free utility's will it trick in costumers or they won't even call you & you'll completely loose the costumer

[@CanadianRealEstateChannel]

It really depends on your market, and what people are used to. If they're used to utilities included it may be hard to rent out + utilities, if the market is used to tenant paying utilities - that would be my preference. It also depends on if the property is separately metered (if not, you can't have the tenat pay their own utilities) This is often the case in old houses that have been converted to multi family.

[@CoCoMonsta]

Great vid Matt. Would love to get your opinion on (Hamilton Ontario’s ) current market where I live. Prices have sky rocketed in last 2 years which you Proly know. If you were me would you try to find a 1% rental property here ? Or should I Look somewhere near hamilton. Say brantford or something ? Thanks Matt.

[@CanadianRealEstateChannel]

Hi Bill - I think that really comes down to your personal preference and what your long term goals are. Can you find 1% properties in Hamilton? (I'm not familiar with your RE market), if you were to purchase in Brantford would you manage it? Are you willing to manage an out of town property? What is your goal with real estate investing? Is it cashflow? if so finding a strong cashflowing property (like a 1% property, is likely important). I know this wasn't a silver bullet - but hopefully it helps get things percolating for you.

[@XIIIRog]

it's not a rule, if you cant, follow it all the time though? xD but i get your point nice video

[@JohnDoe-xh3el]

Def no 1% in kitchener waterloo

[@modesiu]

As I plan on moving to Aurora ON in six months I've been looking at the real estate market there and it makes absolutely no sense. There are dozens of 3 or 4 bedroom houses for rent for around $2,000 that are worth $800k to $900k. They don't fit the 1% rule, they're more like 0.2% rule. In this market, it makes no sense to buy a $800K house to live and even less buy it to rent! Why are people making these terrible investments?

[@CanadianRealEstateChannel]

Wow, yeah, unless you planned to live there forever and money was of no concern - it really seems like renting would be the much better option from a financial stand point (assuming you banked the difference between buy/rent) - will you be renting or buying? - thanks for sharing your experience!

[@modesiu]

Think about it this way: I want to live in THIS particular neighborhood because I love THIS particular parks and amenities around and I want my kids to go to THIS particular school. To live here, I can either drop $300K as down payment and pay a $3.600 a month mortgage for 25 years. Or.... I can rent it for $2.000, invest my $300K and the $1.600 difference every month in something else (like TD e-series funds and Vanguard ETFs). AND not worry about property tax, maintenance, upkeep, capex.... I think it's a pretty easy decision to make. Instead of owning a 1 million dollar house 25 years from now, I'll have a million dollars in the bank (adjusted for present value, of course).

[@JeffWybo]

First.

[@CanadianRealEstateChannel]

Holy Shit - Jeff Wybo on top of the notification squad!

[@honestly101]

I only disliked you Jeff because you were first I hope you would do the same if I was first.

[@CanadianRealEstateChannel]

😂😂😂

[@joeschmoe6492]

There is literally zero 1% properties in Ottawa right now lol. Not even close

[@BagHolder323]

Love your channel but my eyes hurt. Focus that camera, dude.

[@catherineto]

1% rule ? Why ? If we use this rule, none of the properties in Canada will be attractive to investors.

[@Walina1001]

Only scammers or novices "use" a 1% rule.

[@CanadianRealEstateChannel]

Ok - should I return the 100+ units I currently own? Should I just quit investing now? Should I fire my 10+ employees and tell them I’m a scammer and novice? Please o wise one share your wisdom.

[@Walina1001]

@@CanadianRealEstateChannelNO, you should educate yourself and not pass on incorrect scammy information. Oh, just realized I already called you out and you chose not to respond in a business like manner. Show this to your employees. Or you could talk about PTR ratios in an intelligent manner instead of resorting to scammer metrics. It's on you now.

[@HungarianExperiment]

@@Walina1001 One of Matt McKeever's employees here! Been working with Matt for +2 years now and even worked on passion projects with him for a year before that! He LIVES the lifestyle and helps people across North America achieve financial independence through real estate investing using the 1% rule! I love how Matt talks to those who assume him and others are 'scammers' and have limiting beliefs that comment with EMOTION over LOGIC. Data over Drama no face who doesn't even use their REAL NAME or have any documentation of who they are! Who's the real 'scammer'....

[@Walina1001]

@@HungarianExperimentHi Mrs. Experiment, thanks for your reply. This isn't a popularity contest. I was merely pointing out the incorrect information Matt was posting. Now you say he, " helps people across North America achieve financial independence through real estate investing using the 1% rule! " Exactly how, because I am calling bullshit on that? I would love to hear you or any of his 9 other employees or even one of the people across North America tell me how this worked. Surely if this is a repeatable process and not some emotional rantings of someone addicted to internet "likes" then it should be very easy to document. Are you up to the challenge?

[@HungarianExperiment]

@@Walina1001 Check out what Matt spent his whole weekend doing to provide value to others and build a community of real estate investors across Canada/US: kzbin.info/www/bejne/a3iki4GIab2Zg80

[@Walina1001]

The 1% rule means nothing other than If rents are $1,000 in a particular market the investors will only pay $100,000 for a chance at that rent. In a .8% market investors are willing to pay $125,000 for that exact same amount. This is basically a scammer metric to sell novices less profitable properties. If you want some real analysis you need to look at the changes in values/rents/ratios. I have been buying in .8% markets for 40 years. I never looked at PTR ratios because they are meaningless. In my markets my values double in about 10 years. So now my value is $200,000 and my rents have also increased to about $1,600 and my PTR ratio is STILL about .8%. When I look at some of these 1%-2% markets I see that 10 years later the market value is still about $100,000 and rents are still about $1,000 and the ratio is still about 1%. See how thinking you are analyzing a property based on a PTR ratio got you invested in a much less profitable market. PTR ratios work for the scammer that is selling to you.

[@patrickh613]

Your response is super interesting. I am in arizona and have been shopping for a rental. When i apply this 1% rule all the potential cash flow deals are disqualified that still seem like great opportunities. For example i can put 5 percent down on a house out here my mortgage is 1750 and the rent is 2k. Im cashflowing 250 a month and getting the equity how is that not a good investment even if it doesn't meet the 1 % rule???? And the 1750 includes everything

[@Walina1001]

@@patrickh613You have to answer why investors are paying more for less rent. Is it because they have less capex, they appreciate more, you can actually collect rent every month vs not rent for months and thousands spent for evictions? I'm not saying paying 30 times rent is more profitable than 10 times but there is something wrong if rents are selling for only 5 times.