I understand that people shoot for the 1% rule. 1% rule is the monthly yield on Rent after ALL EXPENSES such as Vacancy, Management Fees, Condo Fees, and setting up Repair Funds. The 1% rule is the same as getting 12% yield on the year.

What's wrong with just getting a 4% Yield? Isn't getting 4% Yield after ALL EXPENSES still pretty good because of Depreciation?

Let's assume $100,000 Condo, 5% Rate, 25% down, 30 year Loan.

After 30 years, assuming 3% growth each year, the Condo will be worth $242,726.

Depreciation is $3636 a year. ($100,000 Divided by 27.5).

If you are at the 30% Tax bracket, Gov is giving you back $1090 each year for 27.5 years.

If you Invest this $1090 each year for 27 years, assuming 10% from S and P, you would have $159,488.

So after 30 years you have $242,726 in Equity + $159,488 from investing the Depreciation, = $402,214

Now add the cash flow from all the excess rent. If you invested the cash flow into S and P, you should be at least $100,000 after 30 years.

Now the total you have is $502,214.

$502,214 is already better then investing $28,000 for 30 years at 10% compounded return.

Shouldn't 4% be the minimum Yield instead of trying to shoot for 12%? Any thoughts?