How to Evaluate Properties in 60 Seconds or
Less
by Dave Peniuk
 I have to give credit to Julie for this little tip. This is her creation.
Somewhere along the line she just started doing this to simplify and speed up the process of evaluating
properties for their cashflow potential. As she confessed last month, she doesn't like numbers and math to evaluate properties. And, this technique
is one simple calculation that tells her to continue looking at a property or to move on. While I spend hours
pouring over spreadsheets and killing the battery on my calculator to assess the cashflow of a property, Julie
can make her decision whether to investigate a property further in 60 seconds.
Julie calls it the 1% Rule
All you need are two numbers: the price of the property and the rental income you will get each month. If the
monthly income is 1% of the purchase price then you are pretty much guaranteed a property that will cashflow.
For example, if you have a property that costs $300,000 and it gets $3,000 per month in rent, Julie's simple
calculation tells her that it is a property she'd like to learn more about. The numbers are looking really
good.
If you have a property that costs $300,000 and the rent is $2,100 per month, it's hitting .7%. She'd probably still
look into this property, but she'd do it knowing that the money will be tight. Anything lower than than .7% is
going to be really hard to make cashflow without either a big downpayment, lower purchase price or higher rent.
The 1% Rule in Action - Making Sure Properties in a Specific Area have the potential of producing positive
cashflow:
We're looking at areas in Canada and the U.S. where we will record our upcoming video series. In the video series
we're going to follow our real estate investing process from start to finish to buy a property. One of the places I
have been researching is Austin, Texas.
| 
