There is an old accountant's rule-of-thumb, that a real-estate
investment is a good investment if the gross rental income is at
least one percent of the property's value, per month.

Is this a myth? Where do such properties exist? Investment options
I've looked at only yield about 0.6%

Hey there,

The best article I found that addresses this subject
is:(http://www.slatefinancial.com/roe.html)

This article says that "the 1% rule of thumb is not a bad gauge to
quickly surmise the break-even point from a cash flow perspective" but
admits that "The above scenario is a perfect world. In reality, you
will contend with closing costs, repairs from deferred maintenance
that the previous owner left you and working capital needs."

Search strategy:
Google search for "investment rule of thumb 1%", "investment rules",
"investment return", and "investment 1% rule"

Hope that help,
Josh Fraser

Here are several other articles that dicuss principles in finding
worthwhile property in which to invest.

"How to ride the next real estate wave" from BankRate.com
http://www.bankrate.com/brm/news/real-estate/20040408a1.asp

An MSN article "How to find good investment property":
http://moneycentral.msn.com/content/Investing/Realestate/P39214.asp

You may also be interested in this Property Investors Club Newsletter:
http://www.thepropertyinvestorsnewsletter.co.uk/

Josh Fraser

The lower the price per rental unit, the higher the percentage return
from rent.  Some investors start with a duplex-type building in the
poorer section of town.  However, as you might imagine, there are
other difficulties that begin to present themselves when you begin to
rent to economically poorer people.  The right property for you is
low-priced enough to provide an attractive percentage roi with each
rent check, but not so low-priced that it presents too many headaches
to make it worthwhile.

As some of the others suggested .6% may be workable if you can expect
the average tenent to stay a year, make the last rent payment and
leave the unit needing few repairs. In poor neighborhoods in the USA
that is over optimistic, and you can be charged with discrimination
for using your intuition to select the next tenent.   Neil

I think the 1% rule only applies in times of generally stagnant real
estate values.  Since a 1% monthly return yields a 12% annual one,
that would make a fairly good ROI in and of itself.  With real estate
values increasing at annual rates of better than 15% in my local area,
if one's cash flow could handle it, the increase in value while the
property was empty would yield a even more generous ROI.  Further,
since most, if not all real estate investments are leveraged heavily,
the return would be higher still.

So, I believe, the 1% rule is out of date and harkens back to a time
where real estate appreciated much more slowly.  Either that or it
only applies where that is still the case.