Investors: You Won’t Achieve the 2% Rule Unless You Do THIS.

Investors: You Won’t Achieve the 2% Rule Unless You Do THIS.

1 min read
Matt Faircloth

Matt Faircloth, co-founder and president of the DeRosa Group, is a seasoned real estate investor. The DeRosa Group, based in historic Trenton, N.J., is a developer and owner of commercial and residential property with a mission to “transform lives through real estate.” DeRosa creates partnerships to finance select real estate investments and has a proven track record of providing safe, profitable investment opportunities to their clients.

Experience
Matt, along with his wife Liz, started investing in real estate in 2004 with the purchase of a duplex outside of Philadelphia with a $30,000 private loan. They founded DeRosa Group in 2005 and have since grown the company to hundreds of units in residential and commercial assets throughout the East Coast. Under Matt’s leadership, DeRosa has completed tens of millions in real estate transactions involving private capital, including fix and flips, single family home rentals, mixed-use buildings, apartment buildings, and office buildings.

Matt is an active contributor to the BiggerPockets Blog and has been featured on the BiggerPockets Podcast three times (show #88, #203, and #289). He also regularly contributes to BiggerPockets’ Facebook Live sessions and teaches free educational webinars for the BiggerPockets Community.

Matt authored the Amazon Best Seller Raising Private Capital: Building Your Real Estate Empire Using Other People’s Money. The book is a comprehensive roadmap for investors looking to inject more private capital into their real estate investing business and is a must-read for anyone looking to grow their business by using private lenders and equity investors. Kirkus, the No. 1 trade review publication for books, had this to say about Raising Private Capital: “In this impressively accessible introduction to a complex subject, Faircloth covers every aspect of private funding, presuming little knowledge on the part of the reader.”

Matt and his wife Liz live in New Hope, Penn., with their two children.

Education
Matt earned a B.S. in Industrial and Systems Engineering with a minor in Business from Virginia Tech. (Go, Hokies!)

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Many investors use the 1 or 2% rule as a rule of thumb to do a quick evaluation on real estate deals.

In essence, you take the rent per month and divide it into the price of the property, which yields a percentage. The higher, the better, of course.

Everyone seems to strive for the 2% rule, but I have rarely seen many achieve it. People actually don’t realize how good of a deal the 2% rule is. In the first half of today’s video, I break down the 2% rule to show what cap rate and cash on cash return you are looking at if you are lucky enough to get a 2% deal.

Related: 2% Rule? 50% Rule? Here’s the #1 Real Estate “Rule” I Use to Assess Property

Do THIS if You Want to Achieve the 2% Rule

Many wholesalers and turnkey marketers will show their deals to be a 2% performer but be cautious. You should also consider the area, as properties in D-class areas or war zones can show high performance on paper, but come nowhere near projections in reality. The 2% rule is possible, but it takes a certain angle of attack to get there. In the second half of the video, I go over what you need to do to get to the 2% rule or close to it!

[Editor’s Note: We are republishing this article to help out newer readers.]

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I look forward to hearing from you! Have a great and profitable week.