#AskBP 083: How to Use the 2% Rule When Evaluating Rental Properties?

by | BiggerPockets.com

In this episode of the #AskBP Podcast, Scott Trench talks about one of the “rules of thumb that many real estate investors talk about – the 2% rule. Scott explains how this rent to price ratio is used when looking at particular kinds of properties and properties in different parts of the country. You’ll learn when and where to apply this rule, and learn about the areas where it has little relevance, and why. Don’t miss this episode on a controversial BP topic!

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About Author

Brandon Turner

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He began buying rental properties and flipping houses at age 21, discovering he didn’t need to work 40 years at a corporate job to have “the good life.” Today, with nearly 100 rental units and dozens of rehabs under his belt, he continues to invest in real estate while also showing others the power, and impact, of financial freedom. His writings have been featured on Forbes.com, Entrepreneur.com, FoxNews.com, Money Magazine, and numerous other publications across the web and in print media. He is the author of The Book on Investing in Real Estate with No (and Low) Money Down, The Book on Rental Property Investing, and co-author of The Book on Managing Rental Properties, which he wrote alongside his wife, Heather, and How to Invest in Real Estate, which he wrote alongside Joshua Dorkin. A life-long adventurer, Brandon (along with Heather and daughter Rosie) splits his time between his home in Washington State and various destinations around the globe.


  1. karen rittenhouse

    Wow. So here’s what we find.

    2% is crazy high – 1% is more common for us here in North Carolina. But most of our holds are nicer properties.

    When we buy lower end houses and buy them cheap, say a $75,000 ARV house for $40,000, – then yes, the 2% rule can apply – we can get $800 per month for those.

    So maybe the people here having trouble understanding how 2% works aren’t realizing that those properties have to be purchased with a VERY deep discount and 2% is of the purchase price, not the ARV.

    Is this correct? No way we can get 2% of ARV here.

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