Help with the 2% 50% Rule

[Cheryl S]

Hello everyone,

This forum has been invaluable to me. Thank you for sharing your knowledge.

I live in CA, and I'm looking at a duplex out of state. No way could I afford anything around here.

Anyway, the duplex is $15K. One half is currently rented $475. The other is vacant and needs repairs.

So according to the 2% rule, I should be getting at least $300 in rent? I read on here that it is based on purchase price + repairs to make it rent ready. So if I put $10K into repairs for a total of $25K including purchase price, I should be getting at least $500?

I'm having trouble with the 50% part. What expenses does the 50% cover? The other 50% would be cash flow?

Sorry. I'm a newbie and tend to look at homes emotionally - since I want to restore them in the future. I hope someone can help me with the logic/numbers part.

Thanks!