Looking for US cities/areas where 2% rule still applies

Investor · Portland, OR · Member since 2014 · 3 posts · 0 votes

I've been real estate investing on the west coast for about 5 years, but prices are getting so high here that it's tough to find attractive cash returns anymore. So I'm starting to look for out of state opportunities, can anyone recommend US cities/areas that can still meet the 2% rule but can still rent out reliably?

I'll have to build an out of state ground team, so any referrals for realtors and/or property managers that can identify properties with solid cash returns would also be appreciated. Thanks!

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Patti RobertsonBusiness Member

Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes

We can do that easily in Hampton Roads, VA.

757-472-2547

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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
9y
There are still some of those in Minneapolis just not in the neighborhoods that I would personally live in. I know a realtor that does property management and has reasonable contractors. Their company owns many rentals in those neighborhoods.
[email protected]512-888-9122
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Candace Ellison
Property Manager · Murfreesboro, TN · Member since 2015 · 85 posts · 48 votes
9y
Chattanooga, TN is great city for rentals and flipping.
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William Allen
Investor / Wholesaler · Nashville, TN · Member since 2014 · 1k+ posts · 667 votes
9y
Pensacola FL, my goal is to get my buy and hold guys at that criteria on my wholesale deals.
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Danny Wynn
Investor · Birmingham, AL · Member since 2016 · 23 posts · 1 vote
9y
@Candace Ellison How is wholesaling in Chattanooga area?
@William Allen How is wholesaling in Pensacola area?
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William Allen
Investor / Wholesaler · Nashville, TN · Member since 2014 · 1k+ posts · 667 votes
9y
@Danny Wynn, we are providing a steady flow of deals for our investors.
What about Birmingham? I would think that would be a good city to find 2% rental properties. Is it crowded with investors?
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Danny Wynn
Investor · Birmingham, AL · Member since 2016 · 23 posts · 1 vote
9y
@William Allen That is good to hear about your area! Birmingham is a good market. But yes there are a lot of investors in this area.
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John Wallace
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Investor · Portland, OR · Member since 2014 · 3 posts · 0 votes
9y
Thanks for the pointers everyone! I'll do a little more research and get back to this thread if needed.
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Patti RobertsonBusiness Member
Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
9y
We can do that easily in Hampton Roads, VA.
757-472-2547
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Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
You're going to have a really hard time finding anywhere good that meets the 2% rule. It's just not very applicable in today's real estate economy. Anywhere you find that does meet it, I would be leery and before you do anything, find out why it hits it. Nothing I know of right now that is good hits it.
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Hadar OrkibiPro Member
Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
9y
I agree with @Ali Boone, more often then not there is a reason why houses sell so low, often the areas are wore zones, or have high vacancies or the house have some issues. not saying its not doable as one off bargain but a 2% suburb will be pretty rough.
I have a family friend in LA that owns over 1000 units (multi units) he started purchasing them back in the 1970s when yields were over 15%. time have changed, we are in the information age, there is BP and everyone who is financial savvy know that REI is the best way to build and preserve wealth. Its also to do with where the market is at, at the top of the market it is much more challenging to achieve higher returns, in the recession recession there are opportunities to buy houses at a discount so provided rents stay the same the returns will be higher.
for example, i see that in Memphis back in 2007 house sold for 100k, then 2013 same house sold for 55k and now 2016 its selling for 80k. if history will repeat its self, and property cycles often do every 10-15 years soon the party will be over for most. and new party will start to those who are well positioned.
So @John Wallace considering you have few properties under your belt I suggest be patient and wait 1-3 years for the correction.
Saying that, +1.5% would sufficient for good location.

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Matt R.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
9y
Originally posted by @John Wallace:

I've been real estate investing on the west coast for about 5 years, but prices are getting so high here that it's tough to find attractive cash returns anymore. So I'm starting to look for out of state opportunities, can anyone recommend US cities/areas that can still meet the 2% rule but can still rent out reliably?
I'll have to build an out of state ground team, so any referrals for realtors and/or property managers that can identify properties with solid cash returns would also be appreciated. Thanks!
Nearly every city/town in the midwest and northeast. I imagine all over the south too. I was able to get 2% in Colorado even. I have some hook ups there if needed. If it is 2% there is a chance a fundamental issue is off. Low incomes, section 8ville, declining industry but not always. Keep in mind the 2% rule was for mobile home investing.
Good luck with your search!
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