I ask because it seems near impossible to find an investment property that fits the 1% rule. I'm in Alberta, best I can find so far is $210K purchase price renting for $1350. Is there something unique about the USA or Canada that changes the 1% figure?
The '1%' rule is just a basic rule of thumb for instantly screening properties wrt comparable long term passive investment opportunities. IE
A $200k house, renting gross for the 1% of $2,000/mth, then assuming 50% of gross rental will be required for management fees, property tax, maintenance (short and long term items), and occasional vacancy periods. So that after all the expenses you are looking at ~6% annual 'net' return before tax.
This assumes paying cash for the property, and no appreciation. If the deal is less than that 1% rule, you would be better just putting the cash into VTSAX with better returns and a lot less hassle.
It seems very hard to get this outside the USA, where housing prices seem to have gone insane in many Western type countries over the past 20 years. EG Canada, UK, Australia, NZ, ...
Why? Due to a combo of low interest rates, not enough new building or already crowded urban areas restricting inventory, indirect government subsidy via capital gains being untaxed, and people essentially speculating on housing prices continuing to climb faster than inflation. Plus the old 'I don't trust the stock market, I prefer 'bricks and mortar' - it worked for my parents and it'll work for me"
And who can blame them - recent history is on their side! If you bought property 10 years ago in Vancouver, London, Sydney, Auckland, Seattle, ... you've made a
damn good return so far.
A way around this bind is to simply do some detailed research, bust some shoe leather, and find distressed 'ugly' properties you can get under true market value. A bit of DIY improvements to put in sweat equity, some cheap financing, self management, and you can gain both some instant equity that makes up for the poor rents, plus use leverage to boost 'cash on cash' returns. Make sure the debt is at a longterm fixed rate and hope inflation comes to the rescue.
Or rent your own place and just buy REITs and VTSAX... ;-)