I am starting to analyze some properties around SW & S Minneapolis by using the 50% & and the 2% rules and I am not seeing anything that is fitting within the parameters. Am I missing something? So basically a $300,000 should rent for $6,000 a month?
In desirable areas like SW Minneapolis or S Minneapolis, the 2% rule does not exist. I think you can get to 1% in some areas and depending on the property condition.
There are no 2% deals in this market unless you find a motivated seller with a very distressed property (maybe)
You can probably find it in North Minneapolis and in some areas of St Paul but those are not the best areas.
Instead of worrying about the 2% rule, you gotta decide how much cash flow and return on investment that you want to get as you invest in rentals.
@Brad Park keep networking at your local REIA club and hopefully
2% property will pop up. Good luck moving forward with your real
$36,000 ( purchase and renovation)
equals 2.5% rule
I totally agree with Marc.
Marc Jolicoeur Thank you very much for the info. I keep hearing about the 2% rule and things just were not clicking, now I know why.
I have my own criteria that I use. I want $500 in cash flow and want to get 15% cash on cash ROI for all cash I invested in the downpayment and rehab.
You CAN find deals like that in this market but even that is tough in Southwest. I just acquired an MLS property like that in the 'burbs.
I think you can get 1.5% or 2% deals in Rochester, St Cloud, or in Milwaukee.
I'll echo what Marc is saying. You can't get 2% anywhere in Minneapolis except North, and that is not a place I'd recommend for new investors. I know a guy that just got a place at almost 3% in North, but he's been doing this a long time, and found a motivated seller.
In south Minneapolis, you could find a 1% deal on a duplex off the MLS pretty easily. SW not so much. Uptown - cripes, don't know how any of those places cash flow unless they've been owned for decades.
I own 7 places in Uptown and all cash flow. Of course I don't rely on reading the MLS listing update each day I get from my realtor but even then, there are opportunities. I've never bought anything that is pristine condition as I'm willing to put money and effort in to renovate.
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