Using the 1% rule-of-thumb, a rental property that gererates $1,000 per month in gross rents could potentially be a very good deal if it were listed for a sale price of A. $150,000 B. $185,000 C. $120,000 D. $75,000

Answer: $75,000

Explanation:

The 1% rule of thumb in real estate is used to evaluate the price of properties. It states that the monthly rent must be 1% or more of the purchase price of the property.

The higher the percentage of the rent over 1% the better.

In the above the best answer would be $75,000 because;

= 1,000/75,000 * 100

= 1.33%

The $1,000 is above 1% of $75,000 and so would be a very good deal.