2 Percent Rule in expensive markets

[Sam Hurdley]

Hey Guys,

Very much a beginner here so forgive me if this is a silly question...

I'm have just read about the 1% and 2% rule and started running a few numbers. I am from Auckland, New Zealand (an expensive market), but the numbers here seem to be WAY off. 

For example, a house worth $800,000 here might rent for approx $2,800 a month. That comes in at 0.003%. Obviously better deals can be found, however, surely this will never get close to 2 or even 1%. I understand this 'rule' is just a guide, but nonetheless it seems extreme. 

In expensive markets such as this, do people usually focus on other metrics than cashflow? Surely these numbers don't mean that investing here is a waste of time?... Hoping someone can provide some insight :)

Cheers