Rental Property Investment

4 Replies

Hi, I was analyzing a potential real estate property. The ROI is anywhere from 15-22% depending on how low I can get the purchase price. Cash flow is ~$350 a monthly but it doesn't meet the 2% rule (it's at 1.50%). So I wanted to ask how crucial is this rule and would you suggest looking at something else or does this still seem like a sound investment?

Not enough information to even offer any intelligent answer, but there's not too much real estate hitting a 2% rule (I prefer guideline, but anyway) these days except in war zones. 

@Lakshmi Nikitha Duggirala - is the 2% rule a must have requirement for your investing criteria? 

I use a tripod of investing criteria and the 1-2% rule is a quick napkin test I use to see if I want to analyze further. Personally I don’t fully analyze anything <1%. 

@Jay Helms  I was trying to assess if the 2% rule should be a mandatory criteria but it seems like not many properties are meeting 2% that still do well. 

Originally posted by @Lakshmi Nikitha Duggirala :

@Jay Helms I was trying to assess if the 2% rule should be a mandatory criteria but it seems like not many properties are meeting 2% that still do well. 

It is only a mandatory criteria if you make one. The choice is up to you. I have found that 2%+ properties are typically in the worst neighborhoods and 1%- properties are in better neighborhoods. 

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