Frequently Asked Questions
A cap rate of 5-8% is typical for residential rental properties. Higher cap rates usually indicate higher risk or less desirable locations. In expensive markets, 4-5% can still be acceptable if appreciation is expected.
The 1% rule is a quick filter: the monthly rent should be at least 1% of the purchase price. For example, a $250,000 property should rent for at least $2,500/month. Properties that don't meet the 1% rule often have difficulty generating positive cash flow.