KGCI: Real Estate on Air - Ditch The 1% Rule And Use The 0.8% Screen For Atlanta Real Estate

Episode Date: August 19, 2026

Summary:Host Niyi Adewole breaks down why the traditional "1% rule" for filtering investment properties is dead in rapid-growth metropolitan markets like Atlanta. Rather than overcomplicating initial deals with complex corporate structures, agents and investors will learn the tactical mechanics of the "0.8% rule" to rapidly screen thousands of listings in seconds. Atwoli walks through a live fourplex case study, demonstrating how to use back-of-the-napkin screening equations, interest rate adjustments, and post-stabilization rent strategies to capture sustainable cash flow.

Welcome to the Financial Freedom Mastermind Group podcast. Here we're all about breaking free from the 40 to 50 year work grind and accelerating our journey towards financial freedom. Join us every Wednesday at 7 p.m. Eastern as we explore different types of investments that can fast track your path to financial independence. We serve as a hub for connecting with fellow members during our sessions so you can share successes, ask questions, and keep the momentum going. Okay, we're going to get this started and good afternoon, everyone.

My name is Nigi Adwale, and I am the leader of the Akaba Home Realty Team. We also manage short-term rentals. We're based out of Georgia, but we now have team members in Georgia, Florida, and Texas, helping investors get closer to financial freedom one deal at a time. And today, we're going to dive into multifamily investing and really small multifamily. And this can even work for single family as well. And we're talking about the 1% rule. And so here's the truth about getting into real estate.

Most people don't fail because the deals aren't out there. Most people fail because they overcomplicate their first move. When you look at a property, they're asking me, hey, should I set up an LLC? Should I bring in a partner? Should I try subject to? Should my first deal be a fix and flip? What about toilets? What about tenants? What about insurance, tax, asset protection? And here's what actually happens. They get so deep in the weeds that they never buy the long term rental that would have actually built their wealth. They drift away from the fundamentals. And tonight, I want to pull you back into fundamentals. And specifically, I want to give you the back of the napkin math that we use on our team to look at properties in under 30 seconds and know whether it's worth a second look or whether we want to move on. If you stay with me to the end, I'm going to show you a real estate deal that we put under contract and closed, plug the numbers in live so you'll see exactly how we think about deals.

But first, I want to dive into where the 1% rule came from, right? It came out of the 2010s. And it really took off through the bigger pockets community. And it became a rule of thumb that every new investor that was at least tapped into the bigger pocket community, learn. Now, why did it spread? Because it solved a real problem. People need a fast way to filter deals.

They didn't want to build a 12-tab spreadsheet for every house on Zillow. And they needed something they could do in their head while sitting in your truck, right? Or maybe sitting at a lunch break. And so here's the rule in one sentence. if a property rents for 1% or more of its purchase price per month, it's likely a cash flowing long-term rental and it's worth a second look. An example would be if you were to buy a house for $300,000 and it rents for $3,000 per month or 1% of the purchase price, it's worth analyzing and more than likely it's going to work. On a flip side, if you were to buy a 4plex

or a quadplex for $800,000 and all four units combined bring in $8,000 per month, that equals the 1% rule, and that's a serious deal that you want to go after. That's it. No spreadsheets, just price, rent. And for years, in a lot of markets, it worked this way. And people were able to use this rule from, say, 2010 all the way up to like 2018, 2019 or so before it started to really get tough. And so the hard truth is that the 1% rule is mostly dead in a lot of the top markets. And the 1% rule really doesn't exist in the metro of Atlanta. When I tell you about, about my own journey, right? As many of you know, I first started buying in Louisville, Kentucky, and I wasn't just looking for the 1% rule. Out there, I was getting 1.2%, 1.3%, sometimes 1.5%,

and that's where I built my early portfolio. And those deals existed. And you can still get some 1% rules out there, right? But the difference between, you know, a Louisville market and in Atlanta, is Atlanta's the sixth largest metro in the country, right? It just passed Washington and Miami with six and a half million people. You've got 37 of the Fortune 1,000 companies based here, such as the Coca-Cola's, the Home Depot's of the world, right? And many of the deltas of the world and many other companies put in their second headquarters and really planting their flags in the metro of Atlanta. And so the prices of the homes have accelerated to a point that that one-percent rule is not realistic, right? At least not for this market. You can still go get it in Louisville,

Kentucky, that's moving at more of a slower pace or in the Midwest. But in markets like this, where you're going to get a lot more appreciation over time, that 1% rule is a unicorn. Can you find one? Sure, but there may be a catch to getting one out here. In the metro of Atlanta, if you're finding 1% rule, it's probably either potentially in a war zone. It needs serious work, deferred maintenance.

There's something wrong with the title or the structure or the seller or it requires an absorbent amount of capital to fix something where the math falls apart. And if a clean 1% deal hits the MLS in Atlanta, you have about three days to put an offer in before it. is gone if you see one, you have to be ready and move fast. And so if the 1% rule is dead, knee, how are you finding deals for clients when they're looking for long-term rentals? You don't quit, right? You recalibrate. And after running thousands of deals with this team and my team and figuring out which one's cash flowed and which ones didn't it, we buy again. And we lend a new

rule of thumb for the Atlanta Metro. And it's called the 0.8% rule. And so for example, on that same example that we talked about before, if you were to buy a house for 300,000 and you can rent it for $2,400 per month, that is 0.8%. And in the metro of Atlanta, that's actually a good deal. And that's back of the napkin math. It allows you to be able to move quickly. And so the first way to kind of figure out what rule works for your market is to understand the price to rent ratio. You take the median home of a price in your market and you divide it by the median monthly rent and you flip that and divide the rent into the price and it gives you a percentage. And that's the percentage of what your rent to price ratio is or price to rent ratio is. And so for the Metro of Atlanta, we're sitting at

right around 0.4%. It's like 0.4 to 0.45 right in that range, right? And that's for the average house. And that's not really investable, right? That's, that's really tough. That means if you're buying a $400,000 house, right, then you're probably only renting it for, you know, call it a little less than 2,000, right? And those numbers do not work at all unless you're putting down 50%. Right. But the deals we want and the ones that actually cash flow or are good deals here, especially when you put down 20% on a conventional loan, are sitting at 0.8% or better, which is double the market average. And so it gives us something to look at and to point to. And also, it allows you to actually identify the ones where there may be some room to negotiate and make it even better, right? And so

when I look at the 0.8% rule and how we actually use this on our team, it's a filter, right? On any given day, our team's looking at roughly, you know, 500 to 1,000 properties across the market, and we can't analyze in detail a thousand deals. Even if it takes you only, you know, 20 minutes to analyze in detail, right, you know, a deal, your whole day would be gone. You wouldn't even be able to pick up the phone to call your clients and let them know, like, hey, I found a couple deals for you if you spend 20 minutes on a thousand deals. That's 20,000 minutes. I don't know how many minutes are a day, but probably not 20,000. And so when you multiply the purchase price by 0.008, If the asking rent or the rent we project, right, that we pull from our system beats that number, it goes in the short list and everything else gets filtered out.

And then we're able to zoom in on those properties and put in offers that make sense for our clients on those properties. And if we can get it under contract, that's when we take an even deeper look. And what people miss is that just because the property hits 0.8% at the list price doesn't mean that we're offering lists. Sometimes we're asking for credits to cover closing costs and potentially buy down the interest rate to make it even better. other times we're just offering a little bit lower, but there's multiple levers that you can pull to make a deal work. And then keep in mind during the inspection period, you can still negotiate even more to sweeten the pot and get even closer to what could be, you know, a 0.95 or a 1%, but that 0.8% allows you to actually see deals that are coming close and be able to go out there and make it happen.

And so what I want to do for you is, I've been talking enough, right? I want to actually walk you through what this looks like live. And so I'm going to show you My screen here, and let's see if this works. Boom, boom. Okay, so screen is being shared. And I utilized the bigger pockets calculator for, like the rental property calculator for running the quote-unquote detailed numbers. And so I actually want to show you on screen. We're just going to call it 1, 2, 3 Main Street.

But this is an actual deal that I purchased, right? And funny enough, I'm helping a client purchase one right next to, like, literally, exact same layout right next to this one. And so this is a quadplex. Purchase price on this was 800K. closing cost on that. You're looking at roughly 3%, which is 24,000. And this is before any negotiation, if you don't negotiate. So this is what they're asking, down payment 20%, interest rate. Interest rates right now are sitting at around 6.3% for a personal home. And so if you're buying

an investment property, that interest rate is going to go up to, it's up about 1%. It's usually roughly 1% higher than what you're paying as a personal home. And so we're going to put this interest rate at 7.3 and have it there. There's no points being charged unless you were actually going to buy down the interest rate, which I typically do not do unless I'm getting credits from the seller. And then on this one, this deal was bringing in, call it 6,400 or 0.8% in rent, right? That's what it was bringing in. From a tax standpoint, the taxes were $8,000. It was roughly 1%. It was actually a little bit less than that, but it's going to go up the next year. So it's roughly 1%. And insurance on this was 3,000 annually for a 4plex. Repairs and maintenance. I usually put this at 5%.

CAPX, 3%. Repairs of maintenance, this is, you know, the minor things that your tenants are going to ask you for on a week to week basis. Like, hey, the toilet's next up or things that nature. And then the CAPX would be more of your water heater going out, roof going out. And it's more long-term expenses. Now, you should inspect the heck out of this investment and understand, hey, what pieces could go wrong and negotiate for those. Whether you're getting warranties, whether you're getting credits, whether you're getting things replaced up front. So you don't have to worry about it down the road. But this is the catch-all to help. you on the back end and allow you to have money just in the account. Vacancy, I usually put it like 5%. Management. I'm managing it myself. And all of this was on the tenants because they were paying their own. There's no HOA. So we're going to finish that analysis. And so this equates to after accounting for everything, right, $263 per month in cash flow initially, like immediately from day one. And the cool thing about this is when you look at the variable expenses, we've accounted for vacancy. We've accounted for maintenance. We've encountered for CAPX. And these, These things may not happen for a long time.

So we're just putting aside an additional $832 per month combined with the 263. And so it's essentially like putting together like $1,100 a month hitting the account and staying there in case of a rainy day. Or if you want to take cash immediately, you can take 263. But the cool thing about this is that over time, it only gets better, right? And so I came into this deal with a vision. I ran the rental numbers and the median rent was actually $2,000 per unit, not what they were pulling in. The reason they weren't pulling in the median rent is they had owned the property

for over a decade. They had no desire to increase the rents and have to go find new tenants and all this other stuff. And they didn't want to do updates to the units. I literally updated two of the units, turned them into short term rentals for the short term, short term, to boost the rental amount and get me to the point that I need to be at to make it make sense. And for the other two units, I've just been steadily increasing their rent, right? I think we've increased their rent by this time period, buy about $4 or $500 over a two-year period or three-year period, which is not bad. And so now we're at where it should be, which is our home, our property, we still have one short-term rental unit, and then we got three other units. And in total, we're pulling in about $8,500 per month. And so now when

you pull this up and you adjust that for the number that we're pulling in now, you can see how this can start to make a heck of a lot of sense. Now we're pulling in $8,500 a month. These things have gone up because we're still taking a percentage, right, to put that. to the side, but now we're cash flowing, you know, 20, 90 a month. This is not that bad, right? 13% consistently. And over time, it's only going to get better because we're going to keep taking the rent up by 3% across the board every single time we do a renewal. And so when you look at this, this is how you can start to build wealth and have your tenants pay down a property that's going to make you a lot of money. So you're getting paid along the way, right? And I've been through the

full circle of the journey, having bought that triplex in Louisville and seen the full four and a half year journey of, okay, stabilize it. Okay, now it's starting to cash flow. Okay, now the value's going up. Now the rents are going up. Now I don't even really have to think about it. And that's the reason I get so passionate when it comes to investing in real estate. It literally allows you to build wealth in your sleep. It's an automatic savings plan. And it's better than most 401ks I know. Because this $800,000 property, I was able to use leverage to get it, right? It's going to go up over time. I can tell you that right now, this property, because we've seen a couple sell down the road that are exact same. They sold for $960 and $9.7.

And there's one under contract for a million, right? And so you're building that equity, right? So essentially, you have your down payment equity back already if you wanted to sell that property. And then when you look at the cash flow that's coming in, it's only going to increase. And if you are to hold this for 30 years, one, your whole mortgage is going to be paid off. So that's 800K paid off by somebody else. And two, it's probably going to be worth way more than that. Right. When you think about how real estate historically has gone up to the right over the years, there's been some blips. But over enough time, it's just like inflation, just like the dollar. starts buying less, real estate gets more expensive. And so this is one where you could essentially become a millionaire off of just one property if you hold onto it and allow the tenants to do what they do. And so this was a quick rundown of multi-family investing, small multifamily and long-term rentals. And so I want to bring this home with three things that you can take with you tonight. Stop over-complicating your first deal. LLC, subject to fix and flip, that's all noise. Buy a long-term rental that pencils or a house hat, right? You could do a house at long-term rental or a regular long-term rental. There's a lot of people that do short-term rentals too. I'd equate that more to if you have higher net worth and you're

looking to get some tax savings immediately to, go do that. But long-term rental is still my bread and butter. That's what I, if a house works as a long-term rental, I'm going to use this as a long-term rental. Number two, the 1% rule is mostly dead in the top markets. In Atlanta, the target of 0.8% is your screening shield. Use that, not 1%. If you're using the 1% deal, you'll never see anything because by the time you see it, Unless you're looking at it like you look at the stock ticker, that property is going to be gone. And then number three, 0.8% on paper is the start of the conversation, not the end. There's still negotiation. There's still the offer. There's still credits and rate buy downs that can get you closer to a true 1% on your actual basis.

But the 0.8% tells us and points us to the ones that make the most sense. And now I want to take any questions that are available. Please feel free to drop them in the chat. Okay, going once, going twice. All right, y'all, if you want our team to actually swap. these 0.8% deals for you in Atlanta, properties that we've already filtered from a pull of 1,000 down to 10 or 15, that pencil.

That's exactly what we do with Akaba Home. We would love to connect with you. You can go ahead and book a strategy call. The link is in the description. And you can go to Akaba Home.com to learn more about the team and how we've been able to help many, many investors get closer to financial freedom through real estate investing. Thank you for joining. I will catch you next time.

Join us every Wednesday at 7 p.m. Eastern as we explore different types of investments that can fast track your path to financial independence.