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Updated about 2 years ago on . Most recent reply

User Stats

7
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6
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Wes Reed
  • Investor
  • Raleigh, NC
6
Votes |
7
Posts

The 2% Rule in Today's Real Estate Market - Is It Still Relevant?

Wes Reed
  • Investor
  • Raleigh, NC
Posted

Hey BP, 

As we know, the 2% rule is a widely used guideline in real estate investing, which states that the monthly rent should equal 2% of the property's purchase price. This rule is often used as a quick way to evaluate the potential cash flow of a rental property.

However, with the recent changes in the real estate market, many investors are questioning whether the 2% rule is still relevant. On one hand, rising home prices and interest rates are making it more difficult for rental properties to meet the 2% threshold. On the other hand, the strong demand for rental properties in many markets is leading to higher rents, making it easier to meet the 2% rule.

So, is the 2% rule still relevant in today's market?

Most Popular Reply

User Stats

4,135
Posts
3,812
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Jaron Walling
  • Rental Property Investor
  • Indianapolis, IN
3,812
Votes |
4,135
Posts
Jaron Walling
  • Rental Property Investor
  • Indianapolis, IN
Replied

**Raises hand in the back of the room**

We purchased on/off market cash-flow properties in C/B- neighborhoods for the last 5 years, and exactly 0 opportunities met the 2% rule. It's not impossible but it's extremely challenging to find. It's not a relevant in today's market. 

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