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Jason Morton
  • unemployed
  • Vancouver, WA
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The 2% rule

Jason Morton
  • unemployed
  • Vancouver, WA
Posted Oct 2 2015, 11:30

complete newbie here but, I'm reading "the ultimate begginers guide to real estate investing" (the free book you get when joining bigger pockets) and I stumbled across the 2% rule which states your monthly rent should be at least 2% of the purchase price.  So basically if you buy a house for $100,000 you should be able to rent it for $2000 per month.  I live in Vancouver where the vacancy rate of rentals is 2.4% way below the national average of 6.8%, and houses out here are renting for way less than 2%.  My mentor is renting his properties at about the local median and for his $240,000 homes he is renting them for $1500 per month (.6%) according to this book this is a terrible investment. this book states that he should be renting this house for $4800 per month which would be impossible.  Am I missing something?  Maybe this rule is more for people buying MFH's in the ghetto?

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