los angeles, CA · Member since 2014 · 15 posts · 3 votes
Hi all, I am interested in investing in a buy and hold property within 30 miles of los angeles, ca where I can get the 2% rule. Can anyone make recommendations on a city?
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
12y
just rented a place for $895, recently bought for $36,000
have place for rent for $895 paid $32,000
rented place for $1,025 recently bought for $49,900
rented place for $795 recently bought for $41,000
have place for rent for $1,195 recently bought for $62,000
rented a place for $275 recently bought for $3,000
but one of the best was a place bought for $30,000, that the first tenant rented for $2,050 (yes,a month)
That 2% rule or even the 1% rule is impossible to get, so don't even try!
Property Manager · CT · Member since 2014 · 687 posts · 329 votes
12y
You can get 2% deals in some cities in Connecticut. You don't even have to look at many deals to find them however they are mostly multi families. Mostly class B and C properties.
Homeowner · Bainbridge Island, WA · Member since 2013 · 20 posts · 6 votes
12y
I think it's important to point out (reiterate from other threads and posts) that the 2% rule is really the 2% rule of thumb. A property that conforms to the 2% rule, but has really high expenses (taxes, all utilities included in rent, etc) may perform worse than a property that is under 1%, if all the utilities are separately metered and payed by the tenants, etc.
Run the actual numbers, don't just say "hey, it's 2%, I can't lose here!" While it's usually true, there are exceptions, and you may find that your 2% property isn't as good as one that doesn't conform to the rule of thumb. Only running the real numbers will tell you.
As for close to LA, I know the inland empire was good for some time, but think it's been recovering, so may not be as smoking as it once was. Maybe start there.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
12y
They say nothings impossible. 2% 30 miles from LA might be the exception and today as rare as landing on the moon. LA has more cash investors than anywhere in the country and probably the planet. There is a gentlemen on BP Aaron Mazzrillo, he is in the LA area, check with him for possibilities outside LA proper. He does find buy and hold cash flow in SoCal.
I live in LA (Venice Beach) and I would nearly put everything I own on saying that anything in LA that meets the 2% rule, I wouldn't touch with a 10ft-pole.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
12y
I think more of an adjusted strategy is in order for LA. I know an associate who just picked up a south central LA duplex for 17k in back taxes plus 10k for owner. That one cash flows for more than 2%. He just flipped it for a quick 75k profit as he had no intention landlording in south central.
In LA, anything can happen and usually does. He is like bp Aaron and looking for more. Don't discount your plan yet.
Not sure about all this 2% stuff. In Central Michigan there is no way. I'm looking at a nice duplex that is listed at 77k, could probably get it for 70k, but probably no lower. That would mean I'd have to rent each unit for an average of 700 dollars to hit 2%. Around here if I put a 2/1 on the rental market for 700 dollars, I would most likely have 100% vacancy. No one would be even half interested! Of course I have not yet made my first investment so I may have no clue. Right now my wife and I are renting a 2/1 for 400/month and with a little updating, our landlord could probably get 500 or 550 but no more. People said on here that the 2% rule happens in the Midwest, but I don't see it happening here.
Not sure about all this 2% stuff. In Central Michigan there is no way. I'm looking at a nice duplex that is listed at 77k, could probably get it for 70k, but probably no lower. That would mean I'd have to rent each unit for an average of 700 dollars to hit 2%. Around here if I put a 2/1 on the rental market for 700 dollars, I would most likely have 100% vacancy. No one would be even half interested! Of course I have not yet made my first investment so I may have no clue. Right now my wife and I are renting a 2/1 for 400/month and with a little updating, our landlord could probably get 500 or 550 but no more. People said on here that the 2% rule happens in the Midwest, but I don't see it happening here.
Rules are not really rules with investing. This is a guideline.
Different markets bring different RIO's.
My market for instance brings high RIO's compared to most other states and areas.
So always keep in mind these percentages are guides. In fact until BP i had never heard of any of these rules.
I bought what made sense financially and thats that. No rules.
So would you say to disregard the 2% rule completely? Cause honestly I can barely see getting 1%. Maybe certain parts of town or over in Saginaw I could do 1.5-2 but I'm not interested in dealing with tenants in those neighborhoods. I just don't want that kind of headache. I guess less risk=less profit.
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
12y
just rented a place for $895, recently bought for $36,000
have place for rent for $895 paid $32,000
rented place for $1,025 recently bought for $49,900
rented place for $795 recently bought for $41,000
have place for rent for $1,195 recently bought for $62,000
rented a place for $275 recently bought for $3,000
but one of the best was a place bought for $30,000, that the first tenant rented for $2,050 (yes,a month)
That 2% rule or even the 1% rule is impossible to get, so don't even try!
But those numbers just aren't possible around here. I'm not saying it can't happen other places, but I'm not sure too many here on BP would agree that it's the norm. If love to rent a 70k SFR for 2000 a month. But there is nobody here that could or would pay that. I feel like I can still positively cash flow, but I can't hit the 2% rule.
But those numbers just aren't possible around here. I'm not saying it can't happen other places, but I'm not sure too many here on BP would agree that it's the norm. If love to rent a 70k SFR for 2000 a month. But there is nobody here that could or would pay that. I feel like I can still positively cash flow, but I can't hit the 2% rule.
If it's not possible in your market, then it's not possible in your market.
Wholesaler · Arlington, TX · Member since 2013 · 59 posts · 29 votes
12y
You can always invest out of state if you really want to get the 2% Rule but that comes with pitfalls as well. Real estate is local so you have to see what the market offers rather than pigeoning yourself in a small hole.
Every where but LA :) Kidding. My properties are all in Atlanta and I work very closely now with properties in Dallas, Indy, Houston, Chicago, some in Atlanta, and a couple others.