New to the rental property investment, any help is appreciated!

[Minsu Goo]

Hello! newbie here, what a great forum with lots of info!
So long story short, I've been looking into buying a rental property.
Found a property that looked promising but nowhere near 50/2 rule.
Not really showing much of cash flow.
If I apply 2% rule, then it should be significantly less than what seller wants.
Sellers' argument is that expenses were higher last 2-3 yrs or so for repairs and
these are non-reoccurring expenses, like siding, windows and doors.
Also rents are pretty low compare to the market.
Should I pay more than what the 2% rule projects?

btw, what's the difference between 1% and 2% rule?

[Kyle J.]

Originally posted by Minsu Goo:

btw, what's the difference between 1% and 2% rule?

About 1%. LOL.

Seriously, first of all, welcome to BP. Second, keep in mind that the 2% rule is just a rule of thumb. It may apply to your market, or it may not apply at all.

Whether or not you should "pay more than the 2% rule projects" is entirely up to you. Personally, I don't use the 2% rule because if I did, I wouldn't even own any of my current properties (which all produce cash flow).

For me to hit 2% in my area, I would have to dive deep into "war zone" type areas, and I have no interest in that. So, you have to decide what return you are comfortable with, and then find houses at prices that support your individual business model in your market.