Introduction and puzzled about 2% rule

[JR D.]

Hi everyone! I'm JR (as in the two letters, not junior :) ) I'm in the "holy crap there's a lot I need to learn before I jump in" stage. I've been browsing here at BP for a week or so now. This community seems very knowledgeable and friendly, so I look forward to getting acquainted with everyone.

My initial quandary is about the 2% rule. In my area of the midwest (medium-sized city), you'd have to buy a place at a STEEP discount in order for rent to be 2% of the purchase price. For example, in most areas around here, a single family house that sells for about $350k would rent for around $2800.  A house that sells for $170k would rent for around $1,400.  Rents aren't even typically 1% of market value. 

Does that mean that A) This market is stupid and it doesn't make sense to try to own rental property here? (at least of the single family variety) or B) You'd have to buy a foreclosure, somehow score a place way below market value for owning rental property to make sense or C) An option I hadn't thought of?

This will be my first foray into REI (other than having purchased my last two homes), so I was leaning toward a SFH that's pretty much turnkey to get the hang of the landlord thing before having to also learn about the rehab end. I work full time, and wouldn't be able to do much if any rehab work myself. But it seems that it wouldn't make much sense ROI-wise to do that. Can anyone offer their thoughts?