There are really not 1% rule rentals in CA right now, AFAIK. Maybe if you're doing direct marketing and willing to take advantage of someone senile without any family to advise them or something, but any sort of legit route - no way.
That said, you can find 1% properties at the low end/C- neighborhood in, say, NJ that would look like:
Purchase price $75k
Gross rent $750/mo
Property taxes $3000/year (yes, that high)
Usual assumptions for 10% management, 10% vacancy, CapEx - call it $300-400/mo
If you paid cash for that property, your $75k investment is only generating $100-200/mo in profits, but with all sorts of potential for problems that would wipe out years of profits at once (major plumbing problem renders the place uninhabitable for a while, tenant sues, tenant damages property, etc). You're getting literally the same amount you could make just on dividends in an S&P500 index fund, but with many times the risk (and many times the headaches/stress).
On the other hand, you could find (here in UT, as of 5-7 years ago):
-Purchase price $150k
-Gross rents $1500/mo
-Property taxes $1500/year
-Management/Vacancy/Capex ~$500/mo (assume a similar structure so Capex is about identical)
Now you're profiting $800-900 per month on your $150k investment, so you're in spitting distance of S&P historical returns, which is probably the bare minimum you should accept.
So the 1% rule isn't set in stone, but my mythical UT property is a pretty good setup (low taxes, higher end neighborhood, etc) and it *still just barely matches the return from stocks*.
Note that I'm assuming nothing about appreciation (other than it'll match inflation) because historically this is what you expect. Over the last decade appreciation (from a very low trough) has been very high all over. That won't last, for reasons that should be obvious (eventually nobody can afford a house unless wages rise a lot). Appreciation is also a bitch because you pay a lot to get into a property up front, and then you also pay a bunch (fees, commissions, capital gains, etc) to get back out if you want to sell. Just to break even selling a place (that you don't live in to avoid capital gains) you probably need 15% appreciation!
That's why people use the 1% rule to weed out properties. It's a good rule of thumb to make sure you're not investing in something that is both riskier and has lower returns than a simple index fund.
-W