2% Rule seems crazy on this one...

[Bill Thomas]

Here's what I read on the 2% rule.....

"The 2% rule says that for a rental property investment to be “good”, the monthly rent should be equal to or higher than 2% of the purchase price."

so....

If I bought a multifamily property at 400K I should receive a rent roll of 8k (2% of 400k) monthly in order to be a good deal? Really?

Somebody help me with this. Say it ain't so.

Billy T

[Russell Brazil]

The 2% rule is good for low end cheap properties...like a $40k property rentong for $800 a month. The rule does not hold up as you move up in price point. Obviously no one is paying $8k a month to rent a $400k property.