What is the 2% Rule? Is It a Smart Real Estate Investing Strategy?

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…
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What Lenders Look for When Providing Financing for Investment Properties

Securing a good piece of real estate is essential when you have a business. However, any piece of property that catches your eye is sure to catch the eye of other business owners, making the competition fierce. In order to come out victorious, you must have your financing in order. This means you are ready to secure a commercial real estate loan. Preparing for financing approval requires knowing what lenders will look at. Keep in mind that a commercial real estate loan is much different than a residential loan. For a commercial loan, the lender considers six different aspects of…
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