2% Rule in Metropolitan Cities...

[Kamlesh G.]

I've been on and off the forums for 6 months now. And i've gotten back in recently. My questions is how in the world can you justify the 2% rule in a metro area? Im looking at a SFH, split into 3 units, 3 blocks from a major university in downtown. Would estimate 90%+ homes are rentals. So here are the facts:

asking: $350k
rent: $2200/month = 1@1100, 2@550
built: 1955

At th 2% rule this property is worth: $110,000!!!!!

The tax appraisal comes in at $120k ( $60k for land, $60k for building)

Avg Home Price in my city is $250k, let alone this location.

How in the world does any REI justify this price, and they are selling around this price as well.

Please please please, help me to understand this logic.