Mortgages & Creative Financing

The 2% Rule: Fact, Fiction, or Feasible?

Expertise: Business Management, Personal Development, Real Estate Deal Analysis & Advice, Real Estate Investing Basics, Mortgages & Creative Financing, Landlording & Rental Properties, Real Estate News & Commentary
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I get why newbie real estate investors might be enticed by the two percent rule. In short, the rule states that if you can rent the property for two percent of the purchase price, it will cash flow. Is that true?

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Occasionally. But smart investors should never rely on one rule to dictate their strategies. Some people buy on emotion and justify with logic—and use the two percent rule as said justification. And some people see the two percent rule as a dictate, and panic when they can’t find properties that fit the mold.

Frankly, some truths need to be revealed about this infamous rule—and I’m here to share them. I can only dream of the day that I get on the BiggerPockets Forums and don’t see a single person ask any of the following questions:

  • How come I can’t find any properties in my market that meet the two percent rule?
  • What if I found a property I like, but it doesn’t meet the two percent rule?
  • Where can I find properties that meet the two percent rule?

Sound familiar? Been asking yourself these questions? Kick the two percent rule to the background of your decision-making process. Here’s why.

Note: In no way am I suggesting that it’s your fault for thinking the two percent rule is important. You’re not dumb. If I were just starting out, I’d put some stock in the two percent rule, too. It’s not your fault. It’s misleading marketing.

Successful investing requires accurate, easy-to-understand information about your properties and the markets you invest in. BPInsights gives you the information you need to find your next great deal and maximize your current investments—from expert analysis to proprietary data sets. Start leveling up your investments today.

What Is the Two Percent Rule?

The two percent rule says that the rental amount a property brings in should be at least two percent of the total purchase price.

For example, let’s say you’re looking at a property that costs $100,000. In order to meet the two percent rule, you would need to collect $2,000 per month in rental income. What if you find a property for $80,000, but it only rents for $1,000? Investors dead-set on the two percent rule would eliminate that property—$1,000 is only 1.25 percent of $80,000.

What about the one percent rule?

Something to note on that $80,000 example: While the property doesn’t meet the two percent rule, it does meet the rule’s little sister—the one percent rule. It works just like the two percent rule, but it only requires that the rental amount be one percent of the purchase price.

Some investors argue that as long as you hit the one percent rule, you are still making a good rental property investment. None of these are hard, fast, or concrete rules, so you can do or use whatever you want with them. But first, let me caution you about how much you use them at all.

Related: Investors: Memorize These 11 Real Estate Metrics Now

Two Percent Rule Reality Checks

Yes, the two percent rule used to be really handy. I don’t want anyone to think that this rule never served a purpose—it certainly did. But here’s the truth now.

Inaccurate terminology

In no way is the two percent rule truly a “rule.” It is strictly a “guideline.” (Maybe someone called it a rule because “two percent guideline” sounds pretty dorky.) A rule is something you should strictly follow. But investors don’t have to follow the two percent rule by any stretch—and quite honestly, following it could get you in trouble.

The two percent rule simply helped you sift through properties faster. If you’re scrolling through 100 properties in a shopping spree, you could quickly eliminate the bottom-rung options. Even in the two percent heyday, you still needed to run more stats.

Estimations vs. actual numbers

Oh man, does this one get my blood boiling. Hear me when I say—and this goes for every single investor out there—never, ever, ever use estimated numbers when you can use actual numbers! If you’re buying a rental property, the only numbers that you need to estimate are vacancy and repairs. Otherwise, you can find just about every number you need.

That’s why the two percent rule is, for the most part, bunk. It’s only an estimation. It doesn’t tell you for sure what the numbers will be—or even that they will be good.

Let’s say you find a condo unit that meets the two percent rule upon first glance. As you gather actual numbers, you realize the area has high property taxes, the condo fee is astronomical, and, for some reason, insurance isn’t cheap. Once you use those high numbers to calculate hard equations, you’ll realize the property offers minimal, zero, or negative cash flow.

But it met the two percent rule! That’s why I say don’t estimate.

Good properties don’t abide by rules of thumb

Many perfectly fine properties don’t meet the one or two percent rules. Every investment requires trade-offs between returns, cash flow, and risk. You could find a property that meets the two percent rule but is such a high-risk investment due to location, property quality, tenant quality, or a declining market that the projected cash flow will never pan out.

Maybe there’s a quality property in an excellent location—but it would only make, say, a 0.8 percent rule (if one existed). Despite the lesser projected cash flow, it might be a better investment!

There are a million other factors to consider. Does it cash flow? How’s the location? What’s the condition? Is the market growing or declining? Is the tenant pool high quality? Those are the questions that matter—not any “rule.”

Times change

Just because something was once a solid rule doesn’t mean it is so now. That’s currently the case with the two percent rule. A few years ago, the two percent rule was viable. Nowadays, that’s not the case. I don’t know of a single (good) market where you could expect to find properties meeting the two percent rule.

I know, I’ve crushed all of your souls. Maybe it will come back one day. Even if it does, though, don’t expect it to apply in cities like Los Angeles or New York City.

Related: How to Calculate Cash-on-Cash Return (Made Easy!)

Should Investors Rely on the Two Percent Rule?

With all that said, should you ever pay heed to the two percent rule? Not really. The two percent rule doesn’t account for, coincidentally, two things:

  1. The condition of the property or location
  2. Your net cash flow

Let’s say you find a $35,000 deal in Florida with a monthly rent of $700. Meets the two percent rule, right? Right.

Two problems. First, I can say with fairly high certainty that any property you find in Florida for $35,000 will be a total junker. Secondly, insurance and property taxes are so high in Florida that combined with the rest of your rental expenses—including repairs on your junker property—you’ll land right at zero (or less!) for cash flow.

So much for that “good” investment.

There’s a lot more to a property than “rules” and guidelines. The closest I, personally, ever got to meeting the two percent rule was a nice rehabbed property in Atlanta I bought for $55,000. It rents for $975 per month. But this was back in the Atlanta heyday—you won’t find a similar deal there now (and if you do find it, be leery).

As the Atlanta market progressed, investors were forced to forget about the two percent rule and start thinking about the one percent rule. By the end of last year, you were lucky to hit the one percent rule! But did barely meeting the one percent rule mean the properties were bad investments? No way! You have to consider quality, location, and tenants—none of which have anything to do with these rules.

Related: 3 Real Estate Deal Analysis Rules Investors MUST Know

How to Determine Feasibility

With today’s hot market, investors are realizing they can’t buy as many cheap properties with great returns as they could even just a year ago. Great news for the real estate market, all of our current investments, and the economy as a whole—but it is forcing investors to settle for lower returns.

At this point in the real estate market, sub-$50,000 properties are, in my humble opinion, sketch. I personally won’t buy anything in this price range. For one, the property will need work. Worse, you’re looking at the lowest class of tenants, which can add significant vacancy, eviction, and repair expenses. An eviction followed by an empty house followed by a nasty turnover repair cost blows your two percent delight out the window, does it not?

In terms of feasibility, here is my process.

  • If it doesn’t meet the one percent rule, by how much does it not meet it, and what’s the market? Kansas City properties that don’t meet it might be bad buys. But if you’re in Dallas and it doesn’t meet it—well, that should be assumed.
  • If it meets the one percent rule, it should be considered. Run all the numbers and know the expected cash flow.
  • If it meets the two percent rule, be leery, but check it out. Again market-dependent. If you’re in Kansas City, yay! Two percent rule! Check it out seriously. If you’re in Dallas… someone has officially found you a junker in a questionable neighborhood that not only needs work but will attract a raunchy tenant.

Use the two percent rule only as a guideline to get you looking at a property. Once you are diving into the numbers seriously, ignore the one or two percent rules entirely. In no way should they justify buying a property.

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Ali Boone is a lifestyle entrepreneur, business consultant, and real estate investor. Ali left her corporate job as an Aerospace Engineer to follow her passion for being her own boss and creating t...
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    Dennis
    Replied over 7 years ago
    I believe the 2% rule is good only at market bottoms. What I am most concerned with is the 50% rule. Selling price in the low income rentals is whatever the market will give you. In Philly to make the 2% rule when selling, either the hot area needs to be moving your way or irrational exuberance must be in place. What is truly important is to have good cash flow, and pay off the property once you have massive cash flow each month who really cares if the property ever sells? One of my early mentors in low income, simply had an absolute auction of all his rentals when he had enough (he was 84). The properties in his words “owed him nothing”, had footed the bill for his 4 children to become professionals, and paid for his comfortable life style. He once told me that he never retired because he really never had a job. Let me add this about this investor he had no mechanical skills, because of this he never spent a second trying to personally add value to any property. Looking back I think he was smart for doing so. But then again I think the skill level of most handymen is very lacking today. I like to fix things once making them as bullet proof as possible.
    Ali
    Replied over 7 years ago
    Great comment Dennis. Good real-life example and way to show that there are different ways to be a successful investor.
    Mark Ferguson
    Replied over 7 years ago
    Great read Ali! I focus on cash on cash returns more than 1 or 2 % rule. I agree tenant quality, repairs needed and other individual factors are more important. I try to have at least a 24% cash on cash return in the 80k to120k price range.
    Ali
    Replied over 7 years ago
    I agree with your premise Mark. What are the numbers associated with the 24% cash-on-cash? Is that with a 20% down mortgage at 4-5% interest? What caps usually equate to that kind of cash-on-cash where you are looking?
    Mark Ferguson
    Replied over 7 years ago
    I typically buy properties for about 100k and get 5 year arms with my portfolio lender. I use 5/30 arm at 3.62% right now. I can rent them for 1200 to 1300 with 10k to 20k of initial repairs. It’s all about buying them right. They are usually worth 150k or so whn I am done repairing them.
    Marv Sauer
    Replied 5 months ago
    A friend of mine has a different approach: he's a broker, to start with. He pays cash for Class A condos, new construction, from reputable builders, in upscale communities. He rents them for two-years, and sells them. He pockets 30K in NOI, plus capital gain of 6% after two-years. Hands never get dirty. My approach is similar: Class A, new construction, condos, upscale communities, with low property taxes. Buy and hold. 4.5% NOI, 4% appreciation / yr.
    Ben Leybovich
    Replied over 7 years ago
    Totally agree Ali! And the problem is that these 2%, 1% and all the other % rules are made such a big deal of, that new investors take them for gold. Huge mistake… Completely agree with the finer points you make!
    Ali
    Replied over 7 years ago
    Yes they do, Ben, sadly! I cringe when I hear a newer (or not so new too) investor justifying a property with one of those rules.
    Melodee Lucido
    Replied over 7 years ago
    Great post Ali. From my senior status in life I have found that rules are made to be broken :O lol I have no desire to be a land lord but have been learning to wholesale small multis virtually. Your thoughts are helpful on my path. I do like the 50% rule due to murphy’s law and just-how-life-works—expect the unexpected and at the worst time . . . in addition to all the other vital pieces of the deal. Thanks for this!
    Ali
    Replied over 7 years ago
    Melodee, my investah sistah, welcome back! I was just wondering about you the other day. We still need to do that coffee in Santa Barbara soon! 🙂
    Ali
    Replied over 7 years ago
    Melodee, my investah sistah, welcome back! I was just wondering about you the other day. We still need to do that coffee in Santa Barbara soon! 🙂 Reply Report comment
    Daniel Fisher
    Replied over 7 years ago
    So true Ali. Just this week a property came up in my area that at first glance looked enticing. 3/1 SFR listed at 23K with new roof, freshly painted and new garage door. It will rent for $1025 the ARV would be 95K. So I took a look. Turns out it needs another 50K. Hmmm right in the middle of the 1% and 2% rule. Using the 50% rule this is a solid investment! But!! Is the 50% rule feasible in this area?? Not even close! This property’s taxes are $3700 a year which equates to 31% of the income! Add another 10-12% for a property manager and there is very little left over for maintance and tenant turnover costs. If I would have used rules to buy this property I’d have lost money! Great post
    Ali
    Replied over 7 years ago
    Thanks for the real-life example Daniel! That is perfect, and exactly the example I want people to realize in terms of these “rules”. ie they don’t always work. Glad you caught that one on that property before you went for it! Sneaky repair costs… 🙂
    Lucas
    Replied over 7 years ago
    Yeah. I guess the “rules” are more useful for quickly narrowing down properties to consider and then you need to do your due diligence prior to purchase.
    Lucas
    Replied over 7 years ago
    Thanks for clarifying your expirience with that guideline. I was wondering what other peoples expirience with it was. In DC area it is virtually impossible to meet even the 1% rule right now (it was at the bottom though 4-5 years ago). So I am biding my time and building my cash pile for future investments either in the area or outside of it if we move.
    Ali
    Replied over 7 years ago
    Hi Lucas, you’re right, DC is one of the areas you’d be having a real good day to find a good deal that meets the 1% or whatever rule. My only thought is, why hold onto your cash and wait? Property prices are only going up from here, as well as interest rates (assumably). I live in LA so can’t invest where I live so I buy outside of where I live. It’s not for everyone, but I encourage you not to rule it out!
    Ali
    Replied over 7 years ago
    Hi Lucas, you’re right, DC is one of the areas you’d be having a real good day to find a good deal that meets the 1% or whatever rule. My only thought is, why hold onto your cash and wait? Property prices are only going up from here, as well as interest rates (assumably). I live in LA so can’t invest where I live so I buy outside of where I live. It’s not for everyone, but I encourage you not to rule it out!
    Sharon Vornholt
    Replied over 7 years ago
    Ali – This post is sure to help folks understand buying a rental property that will actually cash flow. Great job. Sharon
    Ali
    Replied about 7 years ago
    Thanks Sharon!
    Jim Pratt
    Replied over 7 years ago
    The only rules I care for is “it must be cash flow positive” and have “lots of equity”!
    Ali
    Replied about 7 years ago
    Ha! With you, Jim.
    Ali
    Replied about 7 years ago
    Ha! With you, Jim. Reply Report comment
    Ali
    Replied about 7 years ago
    Ha! With you, Jim. Reply Report comment
    Tiffany
    Replied over 7 years ago
    I just heard the 2% rule get mentioned a few times lately here on BP. I had always heard 1% (located in SoCal) and it’s getting tricky to find that. But, I’m happy to say I have had success with it here and I always shoot for at least the 1% gross rents per month to purchase price. Also, I use the 50% rule because it factors in important things like management costs and PROFIT! If I manage myself, then I have more room but I’m not forced to manage if I factor 50% in. With condos I’ll sometimes use a 40% expense rule since I figure the HOA covers some of the pricier repair items.
    Ali
    Replied about 7 years ago
    I’m impressed you can find 1% in SoCal!
    Jason
    Replied over 7 years ago
    Ali, I also cringe when I hear the 50%, 2%, or even 1% rule from an investor. It actually makes me question their knowledge in the field if they use those numbers as their guide. I can understand running numbers in your head, but for more detailed analysis (even as much as back of the napkin) I think it is unwise to use someone else rule of thumb. I have my own historical data on cost on monthly costs. Its usually around 32% without PITI. and I throw an extra $100 per door into a reserve account for long term property improvements items as well. I look for a minimal ROI and monthly cashflow and work backwards. Good post highlighting the fact that even the most simple things in real estate are not so simple. Jason
    Jason
    Replied about 7 years ago
    The rule makes you cringe? The rule, however unattainable with the exception of multi family homes in todays market, is a solid one.
    Ali
    Replied about 7 years ago
    It is a solid guideline Jason, but I’m with the other Jason in that I cringe too when people reference it so strongly that is a determining factor.
    Ali
    Replied about 7 years ago
    I’m with you Jason. I will reference those guidelines in my head just to give myself a quick easy starting point with numbers, but then I never think about them again or reference them.
    Jason
    Replied about 7 years ago
    The rule makes you cringe? The rule, however unattainable with the exception of multi family homes in todays market, is a solid one.
    Robert Steele
    Replied about 7 years ago
    Well said. The 2% should be put out to pasture. It does more harm than good in stopping newbies jumping in and buying something because they cannot find anything that meets the 2% rule. Here in Dallas in 2011-2012 we could get 1% all day long after rents shot up. Now the house prices have played catch up and we’re back to how it’s always been < 1% 🙁
    Ali Boone
    Replied about 7 years ago
    Total agree Robert. But at least Dallas is still a great city to invest! Lower than 1% but still great deals on a mega growth city in my opinion 🙂
    Kevin Chhorr
    Replied about 7 years ago
    Great article to read. Thanks for sharing. I think the 1/2% rule is just a quick analysis for a property. You have to go into more detail to really purchase an investment property.
    Ali Boone
    Replied about 7 years ago
    Couldn’t agree more Kevin!
    Taylor Chiu
    Replied over 6 years ago
    Great article, Ali! Question: What do you mean by “If you’re in Kansas City and it doesn’t meet it, bail. If you’re in Dallas and it doesn’t meet it, well, that should be assumed.”? Thanks!
    Ali Boone
    Replied over 6 years ago
    Great question Taylor, sorry I didn’t expand on that one. Basically every market will have different ‘going rates’ (if you will) for what their returns are. So you want to look at whatever the current market rates are in order to accurately compare properties. For example, Dallas in general right now is seeing 5-7% cap rates as their standard. I don’t know what Kansas City is running right now, but Indianapolis for example is producing 7-8% returns on average. So if you were to go to Indy and look at a property and it only had a 5% cap rate, that would be low for that area. But a 5% cap rate in Dallas would be totally normal. See what I mean?
    Taylor Chiu
    Replied over 6 years ago
    Ok, thanks for the explanation! Just to make sure, cap rate is the percentage of purchase price that I make back in a year, right? And how would I go about finding what cap rates are like in my area? Thanks!
    Ali Boone
    Replied over 6 years ago
    Basically. More than the cap rate, the number I like to use the best is the cash-on-cash return. That number will only be different if you are financing, but if you are, it’s the more accurate number. This article may help- https://www.biggerpockets.com/renewsblog/2013/01/19/real-estate-math/ Where are you located?
    Taylor Chiu
    Replied over 6 years ago
    Weird, the site won’t seem to let me reply directly to your last post, Ali. I live in Provo, Utah.
    Ali Boone
    Replied over 6 years ago
    Hmm…not sure about Utah. I would look up some various properties and use the link I sent you to calculate what the returns would be. There’s a lot more that goes into what makes a good property, but at least pull some random ones up and see what the cap rates are looking like.
    Taylor Chiu
    Replied over 6 years ago
    Ok, sounds good. Thanks so much for your help!
    Deanna
    Replied over 6 years ago
    In San Diego you are lucky to get a .5% ! That said, we have prop 13, so taxes start at 1% of property value & don’t go nuts if the property market does (good for the long-term crowd).
    Ali Boone
    Replied over 6 years ago
    Deanna, I’d be impressed with any positive cap rate in SD. You can find 0.5%?? Careful, everyone may want to know your secret 😉
    Ken LaVoie
    Replied almost 6 years ago
    Almost all our 11 properties meet the 2% rule. We bought them distressed but even after putting 100% (+) of the cash flow into capex over 5 years, we have a duplex that meets (just) the “4% rule” and an 11 unit at 2.9%. This is central Maine where it’s easy to get class B, fixed up units for $30k ARC. That being said, 2% rule is sort of like a “I left my calculator or spread sheet at home” back of the envelope quick test. I use the 2% rule more as a “final” test, after all my hard calculations. I actually know the gross rent, insurance, taxes, some utilities, and have a good educated estimate for all other expenses, so why do I really need any rules. If the cash flow shows I’ll earn 10% on my money, 12%, 15%, I’ll use that.
    Ali Boone
    Replied almost 6 years ago
    Lol… I like that Ken! Left my calculator at home…
    Ali Boone
    Replied almost 6 years ago
    Lol… I like that Ken! Left my calculator at home…
    Dale Oudems Investor from Mcdonough, Georgia
    Replied over 5 years ago
    Good article
    Ali Boone Business Owner & Investor from Venice Beach, CA
    Replied over 5 years ago
    Thanks Dale!
    Eric Martin from Enterprise, Alabama
    Replied over 5 years ago
    Nice article appreciate the info. Let’s just say I’m a newbie well because I am and just starting the process of learning the REI world. So the rule of thumbs just from what little I have learned from 3 BP podcasts is a good quick analysis tool to weed out properties that don’t come close. For my own understanding of the process and numbers I ran some random MLS properties followed by a detail number crunch. For me if anything it taught me exactly what you all have said, do not decide buy using these numbers. Each one I ran that met at least met one of the 3 rules, 1%, 2%, 50%, but once you included other fairly fixed things like taxes it became negative cash flow not to mention once I added the others. Again thanks for the post.
    Ali Boone Business Owner & Investor from Venice Beach, CA
    Replied over 5 years ago
    Great input Eric and thanks for sharing! Yep, my point exactly– they aren’t guarantees of profit and should only be basic starter weed-out types of guidelines.
    Senthil Nathan
    Replied about 4 years ago
    I am sorry but 2% is pure fiction. Not a question of if this is possible or not. How can anyone even suggest a formula on such a broad market as real estate. And then sure, call this a guideline as an escape route. Meaningless, if you are already acknowledging this is not to be taken too seriously. Guideline is just another word for fiction. It’s a disservice to mention fake rules like this, especially to a new investor – FYI, I am one of the new investors.
    Ali Boone Business Owner & Investor from Venice Beach, CA
    Replied about 4 years ago
    Sorry it sounds like you feel you’ve been misled by people, Senthil. All the more reason I try to write articles like this. It’s all about the education. There will always be people pitching who knows what and saying who knows what is required and is a necessity and all that jazz, and half of them won’t know what they are talking about. The best thing a new investor can do is just read everything and decipher for themselves what they feel good about and what they don’t. Where the “2% rule” went wrong is when it got called a “rule”. If it had always been specified purely as a guideline and people hadn’t been tempted to take it for the gospel of what should or shouldn’t be, it would have served a fine purpose. It did for a lot of people. Not so much in today’s market, but it was semi-helpful a few years ago when hitting 2% was attainable and it usually meant there was going to be some nice cash flow. But again, people took it too far and never should have allowed it to suggest they didn’t need to run actual numbers. Sorry again you feel like you’ve been done a disservice as a new investor! That’s never what should happen to anyone getting into this.
    Alan Roebuck Investor from Fontana, California
    Replied about 4 years ago
    I have a question of the definition: Is it 2% of the total purchase price, or 2% of the down payment? There would generally be a large difference between these two definitions
    Ali Boone Business Owner & Investor from Venice Beach, CA
    Replied about 4 years ago
    Hi Alan. It’s 2% of the total purchase price. But honestly, where the real estate economy is today, don’t plan to find many properties (and certainly not good properties) that will meet the 2% rule.
    Rodney D. from Haymarket, Virginia
    Replied over 3 years ago
    I like to think of it more as a “benchmark” than a rule. Here in the DC metro area (Va) 2% is not happening. Even 1% is a stretch. .5% or maybe .7%… Seems to me that the more high valued the real estate market, the lower the percent. As Deanna said, ” In San Diego you are lucky to get a .5%” I would image the same for other major markets San Fran, Miami, Chicago, etc. There does seem to be a correlation between being able to purchase these 1-2% rentals in more remote, low-valued areas (think 1+ hour drive out of a major city). My concern with buying properties in these areas would be: 1. How do these rental investment survive market downturns? 2. Are the appreciation of these homes minimal? To me it makes sense to look at these holistically and compare both rental cash flow AND appreciation over a set period of time, say 5 years out. For example, say you had $400k cash and are looking for the best return at the end of 5 years. Is it better to: A) Buy 1 $400k home in a high-valued area (city suburbs), collect 80% profit on the rent (subtracting for taxes, insurance & maintenance) and realizing steady appreciation over 5 years. -or- B) Buy 4 $100k homes in the rural suburbs (1+ hour drive away from the city), realizing a “1-2% rule” on rental cash flow but taking a hit with minimal or, gulp — god forbid, negative appreciation over the same 5 year period? I’m really interested to see if anyone has experience with this? As well as out-of-state rental investments?
    Ali Boone Business Owner & Investor from Venice Beach, CA
    Replied over 3 years ago
    All good thoughts Rodney and you are pondering the exact right things. The answer is–you find the balance between the two options. There are options that might be slightly less on the cash flow than higher-risk areas, but they still cash flow well. That’s the balance between really good areas that won’t cash flow and high-risk areas that “will”. I use the quotations because the higher the risk factor, the higher the chance of not making what you originally predicted in returns. The answer will also be different for each major market. Some markets do well for investing in their suburbs, some don’t, etc. It all varies. If you are trying to learn it more for the out-of-state investments, as you mention at the end, feel free to reach out anytime and I can answer specific questions about those.
    Joshua C. Real Estate Agent from Greenville, SC
    Replied over 3 years ago
    I am in the Atlanta market and really was wrestling with this whole 2% Rule thing. It was nice to stumble on you’re real life example in this particular market as well. Thanks for putting it in perspective!
    Ali Boone Business Owner & Investor from Venice Beach, CA
    Replied over 3 years ago
    You bet, Joshua! Atlanta actually used to have easy 2% properties (and then some) and a lot of them. Now, it’s much more minimal and if you do find something there that hits 2% (or even close to it), I would be very leery.
    Vu T. Investor from Fountain Valley, California
    Replied over 3 years ago
    I’m in Socal. This 2% or even 1% rule is just myth. The prices here are so outrages, you would be lucky to break even in decent areas.
    Ali Boone Business Owner & Investor from Venice Beach, CA
    Replied over 3 years ago
    Agreed Vu. It’s why I buy out-of-state.
    Jerry Thompson from Dallas, Texas
    Replied about 3 years ago
    Very helpful to put these “rules” into a greater context.. thank you!
    Lenin Gonzalez
    Replied 4 months ago
    Yes the 2% rule is the most practical in passive property income . Actually I follow a 3upup rule. You see I own a 2 unit home valued at about $200k. Its located in a blue collar part of my northeastern corner of America. I collect $3000 from each tenant; pulling in a total of $6000 a month. Now the "upup" part of my formula is at the end of the lease when I hope to renew at the 3.5% rule. Once you reach this (about $3500 per apartment) You're in the jet stream to retire really early. There are a million other strategies I can share with you! Let me know if you're interested! Peace.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 1 day ago
    I'm still onboard with the "2% Rule Should Die a Horrible Death" bandwagon