Does the "2% rule" still exist in non-high-risk neighborhoods?

Question

Hi Everyone,

I'm new to this forum, pleasure to join. I currently hold 2 properties in California and am looking in the South East and Mid West to expand the portfolio.

Sorry for the relatively rookie question, but these days I'm having a hard time maintaining a 1% rule, not to mention 2. What kind of cash on cash returns would you consider a rational target? I am currently gravitating to the Nashville sub-county area.

Russell Brazil · Answer

I would consider anything that hits the 2% rule or even close to be a very high risk property

Luka Milicevic · Answer

@Dori Arazi

All depends on the area and the deal. Definitely possible. 1%ers are getting harder to find. I picked up one this year and hopefully getting another here soon. All in surrounding counties.

Marketing and networking can get you at least 1% deals. 2% deals you will have to do a lot of marketing and maybe even get lucky.

Dori Arazi · Answer

That confirms what I'm seeing. I rather not aim for the 2% at the risk of high vacancy or potential eviction fees. Not worth the long run bottom line. I'm currently aiming for 0.85%-1%.

Caleb, can you expand a little on what you refer to as B and C class?

Jay Hinrichs · Answer

you can find it pretty easy in very rural areas were jobs are extremely weak..

pretty much any sub 30k pop town 1 hour from a major msa in the mid west this can be done.

issue there is different than high risk inner city crime etc.. its just more houses than peeps and very low incomes lead to very unstable tenant base.. but you can get lucky.. many do.

Does the "2% rule" still exist in non-high-risk neighborhoods?

Does the "2% rule" still exist in non-high-risk neighborhoods?

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