Columbia, MD · Member since 2020 · 31 posts · 21 votes
Is it typical that the Zillow Rent Estimate is not even above 1% the listing price of a house, let alone 2%?
I'm brand new and starting the 90-Day challenge to buying my first rental property after having attended my first webinar last week. I'm looking in the Fort Meade (Annapolis Junction, MD, and its surrounding areas) as a start to analyzing deals. It's close to where I live and work, and I would like to think that Department of Defense affiliates (Federal Employees, Contractors, and Military) are most likely the responsible sort.
I understand the best deals might not be in my backyard, though I was quite surprised to see that NONE of the houses I looked at in Zillow met the 2% rule. Clearly people ARE landlords in this area, so how are they cash flowing? (Maybe they're not.)
Rental Property Investor · Mechanicsburg, PA · Member since 2018 · 281 posts · 176 votes
6y
@BJ Marshall Hi, finding a property that actually meets the 2% rule is very, very hard to come by. In certain areas almost impossible especially off MLS. Getting 2K in rent a month for a 100K property is highly unlikely. If you are new to investing I would target to analyze properties based on monthly cash flow and really practice getting the details and steps for this correct. If you want a first filter to see what is even worth analyzing further, maybe start with the 1% rule. Even if something fits your initial filter something like high property taxes can ruin your cash flow. So learn how to analyze all factors. Hope this helps
Rental Property Investor · Mechanicsburg, PA · Member since 2018 · 281 posts · 176 votes
6y
@BJ Marshall I might start at $250 door cash flow, thats just what I like to see in my area. I use 5% vacancy, 7-8% repairs, 7-8% cap ex, 8-10% property management or 0% if you are self managing.