Finding deals that fit 2% rent to purchase price rule

[CJ Chen]

Can someone advise me on how to find leads to 2-4 unit properties that fit the 2% rent to purchase price and 50% operating expense rule in an area that is not a warzone.

[Jon Klaus]

Yes, your criteria is getting harder to achieve now compared to the past few years. It's still doable in a number of places in the Midwest and parts of the south. I just checked Cleveland on LoopNet and saw a few that appear to fit.

However, as the market changes, perhaps your criteria should, too. Think about properties that used to cash flow great, and now they are merely good. What happened? Did rents decrease? Probably not. Cap rates compressed because of appreciation. Is that a bad thing? No. It's just hardly been seen for a few years. You might consider buying for appreciation as well as cash flow. Especially at this early stage of the new real estate cycle.