Saint Louis, MO · Member since 2009 · 168 posts · 40 votes
Hello fellow BP friends, I have read many discussions on here about the 2% rule. To my advantage, I have been finding deals that exceed the 2% rule. I am about to close on a house that turns out to roughly be 2.7% turn-key rentable. These are not war zones, I feel very comfortable going into this neighborhood and walking around. It feels weird to me now to say "hey the 2% rule is not good enough" when that seems to be the rule of thumb for pre-qualifying (on paper) a property. What are you guys accepting and finding in your areas??
I am routinely finding 3% deals. It's great, but I had to make some tough choices to get here. I had to pick up my life and family and move. Looking back, it was a great move. I love the area in which I live and it's close enough to my investing area to make it relatively easy to work on. In todays market, I would not even recommend doing 2% deals. Or at least I would make that my minimum requirement.
Jonathan - I'd be more than happy with a 2% deal and ecstatic with a 2.7% one. I'm sure you're going to keep your market close to the hip, though, aren't you. :wink:
I have been finding deals that exceed the 2% rule. I am about to close on a house that turns out to roughly be 2.7% turn-key rentable.
Where? Is this a $100,000 house renting for $2,700 or a $20,000 house renting for $540?
Mitch, The houses I come across are typically in the 25K-40K range. For example this SFR I am buying is for $29,500 and rent in the area is around $800 a month. It's crazy to think that this house sold for $99,000 in 2006 (Year I know its the past).
Jonathan - I'd be more than happy with a 2% deal and ecstatic with a 2.7% one. I'm sure you're going to keep your market close to the hip, though, aren't you. :wink:
Haha thanks Josh, I'll just say that I don't venture that far out of my state. Thanks for changing the sub-forum for this post.
Right now I can pull right around 2.2% and stay out of the war zones with my $27k rental that is strictly for cashflow. I also play devil's advocate by having a rental at 1% but it is an appreciation play in an upscale town.
I am routinely finding 3% deals. It's great, but I had to make some tough choices to get here. I had to pick up my life and family and move. Looking back, it was a great move. I love the area in which I live and it's close enough to my investing area to make it relatively easy to work on. In todays market, I would not even recommend doing 2% deals. Or at least I would make that my minimum requirement.
woohoo! finally got the picture to work. He is the house I am closing on this week. This is from google street view, so yes, the picture is funny looking by the window.
If you hit the 2% rule, it is practically a guarantee that you will have real cash flow. That said, many are happy with 1.5% or better so 2.7% is not only a no-brainer, it is a screamer of a deal if those numbers really are as you say.
AS Mitch stated, $30k only gets you a 2 car garage or a trailer home over here in CA.