Investing Rules
What is the 2% rule for an investment property?
The 2% rule, is a rule of thumb that is used as a general guideline for determining how much you should pay to buy an investment property. The main idea is to only buy properties that produce monthly rent of at least 2% of the purchase price, this would then be considered as a good investment. Anything below 2% would suggest the asset is not worth buying. The 2% rule is only a general guide, it cannot stand on its own as an indicator of how good an investment property actually is. It does not tell you anything about the property's condition, location, net rental income, cash on cash return, cap rate, or appreciation.
What is the 6 year rule for investment property in Australia?
Australia's six year absence rule allows you to turn your primary place of residence (PPOR) into an investment property and collect rent and claim depreciation for up to six years provided you've stopped living there. When it comes time to sell you won't be liable for capital gains tax or CGT for those six years.