Any Markets still follow 2% rule for rental properties
Hi,
Any Markets still follow 2% rule for rental properties that are in decent location, decent rents.. Which market allows this so that I can make more cash flow. Most of the markets I see following less than 1% rule like 0.5% rule like If I purchase for 100k getting rent around 500$ a month which gives no cash flow after mortgage, insurance, maintenance, property manager. Please advise
Most Popular Reply
The 2% rule (where monthly rent equals 2% of the purchase price) is rare in today’s high-priced markets, but smaller, undervalued areas still offer potential. However, you can look toward Midwest/Rust Belt cities (e.g., Detroit, Cleveland, Memphis) or rural towns in states like Indiana or Ohio, where sub-$100k homes in stable neighborhoods can fetch $1,200–$1,500/month (close to 1–1.5%).
Focus on distressed properties you can renovate to boost rent or consider multi-family units to spread costs. While hitting 2% is tough, targeting 1%+ with strong expense management (e.g., DIY repairs and minimal vacancies) can still drive cash flow. Partner with local agents or investors to uncover off-market deals; they’re often the key in competitive markets.