What is the 2% Rule? Is It a Smart Real Estate Investing Strategy?
Many real estate investors have heard of the 1% Rule, but what about the 2% Rule? The 2% Rule states that if the monthly rent for a given property is at least 2% of the purchase price, it will likely cash flow nicely. It looks like this: monthly rent / purchase price = X. If X is less than 0.02 (the decimal form of 2%) then the property is not a 2% property. If it is 0.02 or greater, then you’ve found a 2% property. This can then shed some light on whether or not a property is likely to…