Bigger Pockets Ultimate Starter Guide, 2 noobie questions

[James Freeman]

1. The guide says shoot for 2% of purchase price for rents, assuming that wont fly in Austin ? Also says for flips use the 70% rule and ive been presented a few deals now that are not close to the 70% ARV after purchase price and repair estimates. Are these both still valid ?

2. Is it a viable way to start by buying a new primary residence and renting out my current house ? house hacking may not work for us due to need for at least 4 bedrooms.  

[Kris Wong]

The 2% "rule" is a terrible rule, and I can't believe it's actually in the BP guide. Those kinds of deals are few and far between, or they're in areas that would be considered war zones. Sure, anything is possible, but that doesn't mean it should be your rule of thumb. In Austin it's very difficult to achieve even the 1% rule, which is what many investors are looking for these days. You can find those type of deals in many other markets, though. If you want to find them here, you better be willing to hustle hard to find them.

Generally speaking, the more appreciation that investors are anticipating in a given market, the lower the rent to price ratio will be. Overall, investors are expecting a lot of appreciation in this market, based on high demand to live here, low unemployment, and a strong & diverse economy.