2% rule, do people really use this?

[Ellie Ryan]

I've been scratching my head at this 2% rule of thumb to determine the rent price of a property. I know it's more of a guideline than a rule, but I just don't understand how I could get away with charging $6,000 a month on a $300k house, which is the average price in my market. Houses in that price range rent around the $1,500 - $2,250 a month, which makes more sense to me. Can someone tell me if I'm missing something to this 2% rule??

[Victor Steffen]

Hi Ellie, the 2% rule does not work in most markets. especially not in most appreciating markets or single family homes. It works in mid america where you can buy a duplex for 70k and rent each side for $700. Or in rust belt towns where you can pick up a quad for 100k and rent each apartment for $500. It is not meant to tell you how much to charge for rent. It is meant to help you filter your searches as you canvas the country. I've never had a deal fit the 2% rule and not cashflow nicely. Hope that clears things up a bit!

As an example check out this one i found just now on zillow: https://www.zillow.com/homedet... it is actually closer to a "4.6% Rule Deal".. Good luck