One of these things is not like the other: Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free Abominable Snowman Bigfoot Vampires Loch Ness Monster Santa Claus Man in the moon Free lunch Perpetual motion machine 2% properties Yes, there is indeed a Santa Claus. And I bet you did not know that he pays $900 per month in rent for a small 3-bedroom, 2-bath, brick-on-slab house with ceramic tile floor and new bath inserts where he and the missus raise a brood of miniature people who have excellent carpentry skills. Not exactly common knowledge, right? In this day and age, however, what people don’t believe (and scientists have tried for years to disprove) is that Santa’s landlord only paid $45,000 a few months ago for the house he rents to the Claus family. That’s right—people don’t believe this because there is no such thing as a 2% property, just like there is no Bigfoot or Nessie. An investor can’t find property that can rent for 2% of the purchase price per month. It’s simply a childish myth or perhaps maybe just a dream of a better day. Well… I have great news for the non-believers. With diligence, research, and an able real estate agent as a sidekick, 2% properties can be spotted and, in fact, captured in the wild. They aren't common, but pockets of them exist in certain markets around the country. Hunting the Elusive At year-end 2017, my unit count stood at 122. Cash flow was good. I had capital that could be put to use. My portfolio loan-to-value was enough below my banks' requirements that I could afford to hunt for attractive deals. And I was bored. Looking around, my home market didn’t produce any good results. Ruston, LA is a small-market college town. Rents run about $400 per student/bedroom for housing, but the market prices that demographic at a premium. A 3/2 house will sell for $135-150k but only get about $1,200/month in rent. That might be good for parents putting a kid through school, but I prefer a much higher return on investment. The local market pretty much sucked. What’s an investor to do? Being a big proponent of diversification, I had been already been thinking about whether and where to further diversify geographically. Several years ago, I bought 6 units in Pensacola, FL near where my brother lived. That was the natural place to start looking to snare a juicy deal. Related: The 2% Rule Should Die a Horrible Death Newsflash: The Pensacola and Florida Panhandle market are pricey (you guys probably already know that). On the one hand, my research told me that the 6 units I owned had appreciated 50-80% since I bought them. On the other hand, the rents did not justify further purchases in the Pensacola market. Kind of a good news/ bad news situation. So no luck there either. Sighting the Quarry In February of this year just after the Super Bowl, I started hunting in earnest (had to have something to do with my free time with football season over). On a whim, I looked at the market in Jackson County, Mississippi, where I grew up. Like footprints on a trail or a scent in the air, I found hints that conditions were favorable for finding 2% properties. In the town Pascagoula, Realtor.com listed several dozen properties under $65,000. The online pictures showed clean and, on occasion, remodeled houses at an attractive price point. So I started searching for houses available for rent. That was I caught the first glimpse. The three or four basic houses for rent were all listed for $900+/per month. OMG! I was hot on the trail. Inside Info Naturally, I turned to a local agentâan outfitter, if you will. Someone who lived here, knew the territory, and could scout any and every possibility. I lucked out and met Kimberly Bradshaw, a no-nonsense, numbers type who would go anywhere and do anything needed to find great investments. Kim is an agent for Rovira Realty, the listing agent for several of the houses on the MLS. If anyone could help me prove the 2% property's existence, it was her. At this point, I was sure we would find the truth. It was just a matter of laying eyes on it. Success There is was: 3714 Dale Street. Projected rent of $800/month. Attractive listing price at $44,900. Motivated seller. Accepted contract at $37,000. BOOM. I’ll never forget it. Related: How I Navigated My First and Most Life-Changing Real Estate Deal Kim and I spent two weeks making about 20 additional offers on other properties hoping to get a repeat. Alas, it didn’t happen. But by any measure, this was a success. On June 14th, I closed 10 single family homes in Jackson County, Mississippi. The total purchase price was $594,000, with a gross rent of $8,620 per month for an average ratio of 1.44. That’s a GOOD number. Even better, we contracted an additional 8 single family houses in the same area. These close on August 31st. The total purchase price is $445,000, with a gross rent of $6,700 per month for an average ratio of 1.44. That’s a GREAT number. Together, these properties will cash flow over $5,000 per month after expenses. That’s a FANTASTIC number. So, in the end, Kimberly and I were able to put 2% properties in the same category as Santa Claus. They really do exist. They can be found. But you might have to search pretty hard to find them. So, what do you think: Are you more likely to spot Bigfoot or a 2% property? Do you have any deals that approach these kinds of numbers? Let’s talk below.