The 2% rule

[Jason Morton]

complete newbie here but, I'm reading "the ultimate begginers guide to real estate investing" (the free book you get when joining bigger pockets) and I stumbled across the 2% rule which states your monthly rent should be at least 2% of the purchase price.  So basically if you buy a house for $100,000 you should be able to rent it for $2000 per month.  I live in Vancouver where the vacancy rate of rentals is 2.4% way below the national average of 6.8%, and houses out here are renting for way less than 2%.  My mentor is renting his properties at about the local median and for his $240,000 homes he is renting them for $1500 per month (.6%) according to this book this is a terrible investment. this book states that he should be renting this house for $4800 per month which would be impossible.  Am I missing something?  Maybe this rule is more for people buying MFH's in the ghetto?

[Jassem A.]

2% or better is easier to find in financially depressed areas but it is not impossible to find in the better areas. Most of the time they will not be on the MLS or you would need to offer significantly less and/or do some work to the property for it to be livable.