Understanding the 2% rule

[Michael Mastropaolo]

Hello all. I'm new to this industry and trying to ingest as much information as possible. I'm currently going through the UBG and i'm on the section of the 2% rule. I live in a major city and I'm just not understanding how this rule works. I mean, I KNOW how it works, but where I live, I can't fathom you would be able to get 2% rent on the total cost of the property. For example, taking my SFH that I live in now. I purchased it for 250k. Rent in the area goes anywhere from 1500 to 2200. My house is a complete rehab so I would think I could get on the higher end. The thing is, that's no where NEAR 2%.

So, is this more for a "buy a distressed property, fix it up and then rent it out" type of deal?  I assume it could work in more rural areas I suppose but I just don't see how it would work even if you purchased a property for a good deal, that may need a little TLC in the end.  At most, 1%.  I'm thinking this really depends on either where you live, purchasing a Foreclosure property or a distressed property and fix it up.  Am I correct in stating this?

Thanks all.