Rental Rates

[Bob Lowry]

I just read the "Ultimate Beginner Guide" provided by BiggerPockets and noted the investment rule of 2%, and find it may not be realistic in my humble opinion.

If I am correct using the 2% rule, a home that cost $200,000 should rent for $4,000/mth.

In California, the rental I have cost me $200,000 (low for CA) and I am happy to get $1650/mth or about 9% per year gross return per year on my investment. (1650/12=19800/200,000=9.9%). Trying to get $4k/mth is unrealistic, even in CA.

At the same time, homes in a Cleveland OH suburb that are selling for $60,000 should rent for $1200/mth using the rule but in fact according to Trulia they are renting for $550-800/mth.

Can this "2% Rule" be accurate or has someone made an error?
Getting 2%/mth would be 24% per annum and seems unrealistic.

What am I missing?