2 Percent Rule in expensive markets

[Sam Hurdley]

Hey Guys,

Very much a beginner here so forgive me if this is a silly question...

I'm have just read about the 1% and 2% rule and started running a few numbers. I am from Auckland, New Zealand (an expensive market), but the numbers here seem to be WAY off. 

For example, a house worth $800,000 here might rent for approx $2,800 a month. That comes in at 0.003%. Obviously better deals can be found, however, surely this will never get close to 2 or even 1%. I understand this 'rule' is just a guide, but nonetheless it seems extreme. 

In expensive markets such as this, do people usually focus on other metrics than cashflow? Surely these numbers don't mean that investing here is a waste of time?... Hoping someone can provide some insight :)

Cheers

[Dean Letfus]

Hey Sam, a fellow kiwi here who invests in both countries. You will get into big trouble taking US systems and applying them in nz. They do not work. Nz skills transfer to America but not the other way round. There is a new Zealand thread on BP or there are good forums in nz to get info. Things like the 2 percent rule are meaningless to us in nz. We have other metrics to choose a good deal from a bad one. Net yield is only a minor one.