The 2% Rule

[Tim Healey]

I was listening to the BP Podcast this morning, they were chatting to a couple of guys out of Atlanta, and they mentioned that their first deal didn't quite satisfy the "2% Rule". I have heard of the 1% Rule (rent to purchase value), but not the 2% rule. Can anyone enlighten me?

[Ben Leybovich]

Would you rather 2% top-line on an asset that can be bought for $60,000 and sold for $60,000 5 years later, or a 1% top-line on an asset which can be bought for $60,000 and sold for $110,000 5 years later?

This should make you think! In a portfolio, there has to be a blend of all of the above, but the answer to the above question hides in it a lot of what's not said often on BP :)

Good Luck!