Newsflash: Is the 1% rule a myth?

I am a newbie to real estate. When doing research, I am constantly told about the 1% rule – i.e. When buying a house for investment, your rental income should be at least 1% of the principal you have borrowed. To hit this home with an example: I buy a house on the market for $100,000.00 – I put 20% down, and finance the rest (i.e. I put down 20K and get financing for 80K). The 1% rule would state that I get at least $800 income per month.So my question: Does this really happen, and where (I am based in the US)? I am skeptical because it seems to me that someone who can afford to pay this 1% can also afford to buy the property, so why would they rent? If this rule does hold true, I am guessing that it would be in a place like Detroit?Thanks in advance to the answers… 🙂



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