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Updated almost 9 years ago,
Trying to understand 2%/50% rules
I'm trying to learn more about REI and am having a little trouble with the 2% and 50% rules. I understand the concept, but I'm having a hard time believing that they're regularly feasible.
I currently own one rental property that I bought without doing any strong due-diligence. My positive experience with this property has me wanting to dive in more. When I learned about the 2/50% rules, I plugged in the values for my current rental to see how it shakes out. It comes in at about 1% for the 2% rule and just under $100/month for cash flow. So, that seems like it wasn't the greatest investment.
Where my issue comes in is that I can't imagine ever being able to get that sort of house for the rent required to hit 2%. Are there a bunch of deals that are close to those rules and I just don't know about them? Is it different per market? Something else I'm missing?
For reference, the rental property I have is in Omaha, NE and I get $1280/month in rent and I purchased the house for $123,000.