Author Topic: Examining the 1% Rule  (Read 2551 times)

marty998

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Re: Examining the 1% Rule
« Reply #50 on: December 23, 2020, 06:49:33 AM »
$1.2 million median Sydney has entered the chat.

What does that work out price per sq ft?

My rental about is 660 sqft, (61sqm), so with a market price of 400k it works out as 606/sqft ($805USD /sqft) which is fairly typical in London.
My current home is about 625/sqft ($831USD/sqft)

London city is pricier than Sydney metro.

London metro houses are probably less expensive than Sydney metro houses I quoted.

Markets within markets!

Mako52

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Re: Examining the 1% Rule
« Reply #51 on: December 28, 2020, 07:27:01 AM »
I would like to know which Metro markets within the continental US meet the 1% rule. 

Looking at suburban DC and NY, it's more like 0.5%.  Even looking around LA, Phoenix, etc it's < 1%. 

norajean

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Re: Examining the 1% Rule
« Reply #52 on: December 28, 2020, 07:58:30 AM »
Most of the modest-size midwest cities will work for this and are also pretty affordable, cost-wise.  Think Ohio, Pennsylvania, Indiana, Iowa, Nebraska, etc.

Psychstache

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Re: Examining the 1% Rule
« Reply #53 on: December 28, 2020, 02:01:01 PM »
$1.2 million median Sydney has entered the chat.


*Laughs in Singapore*

Mako52

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Re: Examining the 1% Rule
« Reply #54 on: December 29, 2020, 06:34:40 AM »
I'm sure this question has been posed elsewhere at some point on this forum, but if it's good to be a property owner if the monthly rent is greater than or equal to 1% of the purchase price, wouldn't the opposite be true?  Better to be a renter if <1%? 

marty998

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Re: Examining the 1% Rule
« Reply #55 on: December 29, 2020, 02:46:06 PM »
I'm sure this question has been posed elsewhere at some point on this forum, but if it's good to be a property owner if the monthly rent is greater than or equal to 1% of the purchase price, wouldn't the opposite be true?  Better to be a renter if <1%?

See but at the end of a mortgage, an owner will... own an asset, that has probably gone up in value.

A renter will still be paying rent. Rent which has gone up.

BicycleB

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Re: Examining the 1% Rule
« Reply #56 on: December 29, 2020, 08:51:15 PM »
I'm sure this question has been posed elsewhere at some point on this forum, but if it's good to be a property owner if the monthly rent is greater than or equal to 1% of the purchase price, wouldn't the opposite be true?  Better to be a renter if <1%?

Yes, in past discussions, many have followed your reasoning, @Mako52.

I've seen MMM suggest the same thing. Another comment from him I thought was worth noting was, roughly, learn to be thrifty regarding what's expensive in your area, and take advantage of what's cheap or plentiful or just special. So in a high cost metro, he might rent a small apartment - or exchange labor for rent, as he did when doing labor tourism to Hawaii (he did a bathroom for someone there in exchange for a rent free visit). He commented that in Hawaii, people live in small houses but spend a lot of time outdoors, because the weather and beaches are some of the things to take advantage of.

In the US, I think it's worth seeing 3 levels: HCOL where renting is cheaper, LCOL where buying is cheaper, MCOL where it's a close decision. Maybe 1%, .75, .5% as a rule of thumb? I haven't seen it discussed that way from a renter's viewpoint, that's how I think of it. Obviously from a renter viewpoint there's also the question of stability, because a one year residence is too short to cover the costs of buying and selling, so renters have the advantage there.

I think of myself as living in a MCOL city trending high. I like owning for now, so I own, but conserve cost by renting out rooms. I think my cost is similar to being the renter, though details like future repairs and possible refinancing can make a big difference.
« Last Edit: December 29, 2020, 09:02:14 PM by BicycleB »