2% Rule Real Estate Calculator
Explore our 2 Percent Rule Real Estate Calculator to make wise decisions about your investments. The calculator come in both basic mode and advanced calculator mode. Furthermore, read the formula and solved examples below to get better understanding of how it works.
2% Rule Real Estate Calculator
Formula:
The formula is:
Variables
| Variable | Meaning |
|---|---|
| MR | Monthly Rent (2% of the Purchase Price) |
| P | Purchase Price of the Property |
| 0.02 | 2% (The percentage used in the calculation) |
Solved Examples:
Example 1:
Given:
- Purchase Price (
) = $100,000
| Calculation | Instructions |
|---|---|
| Step 1: MR = P \times 0.02 | Start with the formula. |
| Step 2: MR = 100,000 \times 0.02 | Replace
with $100,000. |
| Step 3: MR = $2,000 | Multiply $100,000 by 0.02 to get $2,000. |
Answer: The monthly rent should be $2,000 or more.
Example 2:
Given:
- Purchase Price () = $150,000
| Calculation | Instructions |
|---|---|
| Step 1: MR = P \times 0.02 | Start with the formula. |
| Step 2: MR = 150,000 \times 0.02 | Replace
with $150,000. |
| Step 3: MR = $3,000 | Multiply $150,000 by 0.02 to get $3,000. |
Answer: The monthly rent should be $3,000 or more.
What is 2 Percent Real Estate Rule?
The 2 Percent Rule Real Estate Calculator is a very useful tool for the real estate investors who want to quickly assess the potential rental income of a property. The 2% rule says that the monthly rent should be at least 2% of the purchase price of the property. This rule helps the investors to know if a certain property they are buying is likely to generate sufficient rental income to cover expenses like the mortgage, taxes, and maintenance or not.
Conclusion
By using the formula and learning through the examples above, you can easily calculate the minimum monthly rent needed to meet the 2% rule. This simple calculation is very handy for investors in making the quickest decisions about whether a property is worth buying or not?
