The seemingly Impossible 2% Rule
Hey Guys! Really excited to be a part of this amazing community of investors! I am starting out in my investing career here in Mexico! I have read all I can get my hands single family home investing, and just recently I have started to look at some properties in three middle-class neighborhoods around of where I Work.
I have probably received 10 or 12 houses that are up for sale in this area, and by investigating a little on the average rentals, I find that the properties are no where near the 2% Rule, not even the 1% Rule. On average of the properties I have scanned, I found they would get a monthly rent ranging from 0.33% to 0.44% of the purchase value of the property. Which translates to a cap rate of 2% at the most ( assuming the property is paid all in cash )
What does this say about the market/neighborhood I am looking into ?
I have a couple of hunches
1. I am not looking good enough ( all the properties I found where offered to me by real state brokers)
2. The market in this neighborhoods has become too developed for purchasing homes ( which makes renting a better deal for primary residence, but thats not what I am after )
Thanks guys! Let me know if I mis interpreted any of the data , this is all new to me.