From PropertyTalk.com Community Wiki
Contents |
2 for 1 Rule
The 2 for 1 rule is an investing rule. It is a rough approximation for rental yield. The rule states only purchase a property if:
Purchase price multiplied by 2 divided by 1000 must be equal to or less than the weekly rent
So for example if the property is $200000 then the rent must be at least $400 a week: $200000x2 = $400000/1000 =$400
Limitations
Buying rules of this sort are approximations and should not be relied on as a sole guide to a good purchase. Instead their role is mainly to sort out the wheat from the chaff and to indicate which properties are worth investigating further. The 2 for 1 rule only considers one salient feature (cashflow) and doesn't consider other relevant considerations such as equity or capital gains.
Related Articles
Related Discussions on Propertytalk
[http://www.propertytalk.com/forum/showthread.php?t=173--Monid 03:40, 31 December 2007 (NZDT)
