How accurate is the 2% Rule?

[Waylon Smith]

Hello everyone! I am reading "The Ultimate Beginners Guide" right now. Question for everyone. It gives a quick definition of the 2% rule (the rent should equal approx. 2% of the purchase price). I know this is not intended to be perfect for every deal but the book does say it is the general rule of thumb. So for a $150k house, the monthly rent should be $3K? That seems high to me compared to the rental rates I have been researching. I am located in North Atlanta and we are in a highly desirable area (great schools, hospitals, restaurants, etc) . I am seeing houses worth much more than $150k and the monthly rate looks to be between $2500 - $2800. Below is a quick link for reference. I am just getting started so I know I am probably wrong. Just wanted to see what you guys think. Thank you!

https://www.zillow.com/homedet...

[Jon Puente]

Hey Waylon, 

The 2% would apply maybe for a short term rental or mid term, not for long term rental.  You would literally have to buy a property for pennies on the dollar and rent it out for "at or above" market rents. 

If you focus on the 2% rule, you will never purchase any properties.  Remember, Cash Flow is only one aspect of real estate.  You also get appreciation, depreciation, tax incentives, mortgage pay-down by tenants, the list goes on.