Formerly Northstar. The Block, The Shot, The Stop
- Sep 20, 2008
- Reaction score
Yeah, I think the 2% rule is insanely optimistic, but if you can find that buy it without even thinking twice.
For shits and giggles I used my same setup: 2% home appreciation for year, 1% of purchase price per year in repairs, 2% rent increase per year. But then changed the initial rent income to be 2% of the purchase price.
It ended up with an initial rent of $7,780 per month (about 3 times the amount it is, and around 1550 per month per person, waaaaay over what a 1 bedroom in richmond goes for let alone a 4)
The total net incomes of the house over 30 years were 2.9 million dollars. That isn't including the value of the home you've paid off. That isn't including the value of the appreciation of the home. That is literally just the net cash flows summed up.
Seriously if anyone finds a house abiding by the 2% rule tell me and I will buy it today
Yeah, you can find that type of place in terrible neighborhoods. But I'm not ballsy enough to be going into that type of neighborhood to try to collect rent or deal with one issue or another. Not even with an AR strapped to my back.I mentioned in an earlier post the 2% rule is really not realistic in most US markets. You have to invest in undesirable neighborhoods or live in a low COL region with a good economy, which is extremely rare now that the housing market has rebounded. That's why I think 1% is more realistic, and even those deals are hard to come by in desirable neighborhoods.