Private Lending & Conventional Mortgage Advice

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Dawal Limbachia
  • Rental Property Investor
  • Chicago, IL
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2% rule before buying a rental property?

Dawal Limbachia
  • Rental Property Investor
  • Chicago, IL
Posted Sep 6 2019, 20:39

Hello everyone,
In one of the BP podcast, Brandon Turner said that the 2% rule works for him in general. According to him, for example, if the property is listed for $100k, then the expected rent should be at least 2k per month. Therefore, 2% return on a buying price is a good deal. But, here in Chicago and neighboring areas, the 2% rule doesn't make sense unless if I misunderstood Brandon Turner. Here in my area, the return on rental income is more like 1% only if the property is new or in great condition. Otherwise, majority of the time it is even less than 1%. So I would like to know if I am missing anything here or if there are any rental investors who follow the same rule.

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