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!

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23 comments

  1. this would never work where i live. cheapest detached are going for 450k and thays just asking price. most you could get for 2+1upstairs and 2+1 downstairs is 3200-3400 should be a .5% test lol

  2. The numbers you are giving are almost impossible to match. I don’t know where you can buy a property for 100,000 that will rent out for 2,000 a month. Also I don’t think your going to have a mortgage payment of $600 a month for a house that can rent out for 2,000 a month unless you put about half down payment of the purchase price. I believe these are unrealistic number.

  3. Hey Brandon. In my country wages and therefore rents are MUCH lower than in USA, so the 1 or 2% rule doesnt really fit. The equivalent of a 2k rent house is like 800 or 900 here I think, in which case people almost always never rent because only wealthy people could afford it and prefer to buy. With a bit of trial and error I came up with a different rule for countries with 1000 (euro) average salary. 0,5% rule would be equivalent to US 1%, and 0,8 % rule would be equivalent to US 2%. When I first learned these rules from american investors I wondered why all below market value houses I came across seemed liek horrible deals until i figured we have to take average rents and salaries into account. These numbers cant apply everywhere.

  4. Newbie Question (if you don't respond to this I won't be offended): I can make any property positive cash flow with the Four Square Method if I pay 100% cash and thus no P & I in expenses; but then the same property is super negative if I only calculate 20% or even 50% down. Do y'all have a rule of thumb or advice on how much I should put down on a property in determining the expenses, cash flow and cash on cash squares? Thank you so much for all of your free advice!!!

  5. You completely lost me on the 50% rule; i understand the others. For example i have a home that should rent for 2400 with a mortgage of 1600(prop taxes, ins, included), going by the 50% rule it will not cashflow. How is that possible?

  6. What if you aren't getting much monthly income from a property yet it is appreciating a lot. The rules do not apply because you are making more on appreciation than income.

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