Real Estate Investing Rules You MUST Know (The 2%, 50% & 70% Rules)

If you're getting started in real estate investing, then you need to know about these 3 rules of thumb (The 2% Rule, 50% Rule, & 70% Rule)!

These rules are basic math equations geared to help you quickly estimate the cash flow of potential real estate investment properties!

In this video, Brandon breaks down each rule with examples, for you to know how to use each one. But, rules are meant to be broken.

Brandon not only demonstrates how to use these rules but also why they aren't always true.

We hope you enjoy this video and if you do, make sure to LIKE, Subscribe, & leave a comment!

___________________________________

[biggerpockets]

What do you think about these rules?


Let us know below!

[mariossaraiva]

My time is valuable. I love that you get right down to the practical information without any fluff. You get right down to business which values my time, and makes me an instant subscriber! Great videos!

[vincentbrown]

Early saving and investing money creates compounds growth, it's a beautiful thing.But it takes focus and discipline. You need to be focused enough to commit to a plan and a process.

[DanielIles]

I used the 1% rule to buy my property in Alaska. Here properties don’t exist at 2% and 1% is really good. I got mine at 1.4%. I will make it up with higher appreciation though!

[nator]

I feel like the 2% rule can’t be achieved anymore with home prices these days. Average price of a home in London Ontario is around 500k..nobody would pay close to 10k/month in rent lol

[johnr.duenas]

Thank you sir. Your videos are extremely helpful especially in my learning stage. I appreciate all that you guys do.

[GillerHeston]

For newbies, be aware that this is a grossly oversimplified scenario. For one thing, you can't get a mortgage on an investment property without at least 25% down payment. Two, it's easy to see comps for house purchase prices, but it takes a lot of research to understand the comps on rent prices. The trick is to find a place where renting is more expensive than buying, but those places are less common because of this very type of scenario. Three, you have to remember that rent number he's using is supposed to be net income, not gross. So you have to think about costs for taxes, insurance, maintenance and vacancy when you're researching investments. All that said, real estate investing is a good tool for wealth accumulation. But it isn't foolproof.

[fortealfredo]

Bro!! I'm so glad I found you! I appreciate YOU for all the value you bring us!

[MTAfrankie]

Thank you very much for this big piece of information. This was one of the most informative podcasts I've seen of Biggerspockets podcasts so far. I like a lot of your stuff. Excited about going you guys.

[navidsoroush]

The 1% or 2% rule can be used to figure out if an area is generally overpriced or a seller’s market. Boston or DC are such. I lived in a house worth 750k that rented for 2k a month. Boston market is more of a buy and hold on appreciation type of investment. Most of the properties that give 1.25-2% are not attractive for appreciation purposes 5-7 years down the road.

[aaaaachew]

Great tips! A suggestion might be to do a video of states where it is most financially favorable to invest in for those just starting out. The cost of properties in cities like New York doesn't lend itself to those who may want to start out on a smaller scale.

[natasharivera]

You make things so easy for me ( i am not educated at all in this type of thing and I am trying to educate myself, and with your videos it’s possible)
I’m not bored out of my mind hearing voice lol and I LOVE how you repeat and explain what you mean . Good job !

[andrecummings]

Thanks for the videos and for “BIGGER POCKETS” Brandon you’re a Blessing.

[jessebirdwell]

I’ll call mine the 0.8%-1% rule. Put me in several very comfortable cash flow and equity situations.

[danj]

Oh my goodness! I'm so glad you guys are covering slang.
You guys should do a series on just slang and terms

[TheIcelandicInvestor]

I have never seen a 2% deal in my life but I have seen a few close to 1%.

[Beautifullymade]

This video was helpful and simple to understand thank you Brandon Turner 👍🏽

[ambermarlin]

Thank you so much Brandon Turner and Bigger Pockets for complete invaluable information for a newbie. Your enthusiasm, paired with how you break it down for someone who knows nothing, is nothing short of AWESOMENESS! I really appreciate you! Warmly, Amber

[td_kdname]

The 2% rule is nuts. If you expect to buy a $250, 000 property and rent it for $5, 000, you're on drugs. Most cities in the US the rent for a nice 4 bed 2 bath house is $2 to $3K. Purchase price is going to be $250K to $400K for a standard middle of the road house. Even a fixer-upper is going to be $1O0, 000 to $200, 000 and you'll put $50K or more in repairs, and you'll be lucky to get $1, 500 month rent. That gives you a 0.5% to 1.0% monthly return, rather than the 24% annual return your 2% rule gives you.

[andrewcleverly]

the amount of time we spend believing we can't is more thank enough time to learn how you can.