For those > 1% rule, are they good investment?

All I can say is this, they are *uncertain* investments. Some may be good for the long term if future appreciation is taken account of. However, one disadvantage is that you have to put down xx% of downpayment to fill the unbalanced cash flow. For example, to bring a 400K house cash flow balanced, you have to put down 150K as down payment. Because this 400K house can only generate $2500/month in rental income, its 1%-rule-value should be 250K (2500/1%), not 400K. The second disadvantage is that you may not know if that community may get more foreclosures and futher pull down the price from 400K, by this time next year it could drop to 300K.

For a community and property that meets 1% rule, it’s a sign their price has reached bottom and you can start to enjoy cash income. You may question that these 1%-rule satisfying houses are all located in ghetto neighborhoods in far exurb, their future appreciation may suffer. Don’t worry, as long as they are located inside or near a high priced metro region, when next cycle comes, they will appreciate at about the same rate as the surrounding metro areas. For primary homes, you want to buy into a great school district, but for investment-only and cash flow centric properties, school district is not your priority.