Should I consider rentals at 90% ARV if rent is 2% of total cost?

[Paul Smythe]

I understand there are plenty of variables that go into an investment, but I'm wanting to know what initial reactions are to the idea of paying 85-90% ARV (after purchase and rehab) for a property that will satisfy the 2% rule. Would you consider the property or would you move along?

I intend to hold the property I'm looking at as a rental. It is in a nice area with no crime at all.

[Kyle J.]

I would definitey consider it. If it truly meets the 2% rule and it's in a nice area, that's pretty good. 

Don't get hung up on % of ARV if you'll be holding onto it as a rental after your rehab it. Just make sure it meets whatever metric you use to evaluate a deal. If you're buying rentals for cash flow, % of ARV isn't that important.

For example, 70% of ARV sounds good right? Certainly better than 90% of ARV. But would you buy a house as a rental that you could purchase for $700k, even if it had a $1 million ARV, if it only rented for $1500 month? I wouldn't.

Point is, you need to know what you're buying, why you're buying it, and what metric you need to accomplish your specific goal.