2% Rule... is it really out there?

[Tim Scott]

Hello, 

Totally new in the game and looking to buy a handful of rental properties (single family, possibly multi family) over the next couple years. I keep seeing the 2% rule as a nice starting point to weed out many areas before doing some in depth research when closing in on buying. In the very informal research I have done in several areas of NorCal and Oregon I can't seem to sniff 2%. I've looked at probably a dozen areas and the closest I can seem to get is barely 1% with most areas in the .005-.008 range. However, 1% appears to be a positive cash flow fairly easily.... $150k financed is roughly an $800 mortgage and with all fees, potential vacancies & repairs, etc. factored into the monthly cost it looks to be under $1200. At 1% a 180k purchase price rents for $1800 which is plus $600 monthly if tenant pays most utilities. What am I missing?

[Jason Hirko]

@Tim Scott Yes, but not in every area. I have lots of houses that meet that rule easily. None I'd live in though...