1% rule calculator
A 10-second screen: does the rent reach 1% of the price?
Designed for residential rental properties — single-family homes, condos, and small multifamily.
Rent-to-price ratio
0.00%
Passes 1% rule?
No
Rent needed for 1%
$0.00
Rent ratio = Monthly rent ÷ Purchase price
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One number isn't a verdict. Run the complete analysis and see if the deal stands on a solid foundation.
Is this a good investment? →How it works
The 1% rule says monthly rent should be at least 1% of the purchase price. It's a quick screen, not a verdict.
In many markets today, 0.7–0.9% is realistic. Always run the full numbers before offering.
What the 1% rule actually tells you
The 1% rule is a filter, not a formula for profit. If a $200,000 property rents for $2,000 a month, it passes — and historically, properties at that ratio have a good chance of cash-flowing after typical expenses and a mortgage. If it rents for $1,200 (0.6%), the math almost never works at today's interest rates, and you can move on in seconds.
Think of it as the first gate in a rental property analysis: fail the 1% rule badly and the deal needs an unusual angle — a big value-add, house hacking, or a steep discount — to be worth more of your time.
Is the 1% rule still realistic today?
In much of the country, no. Home prices have outpaced rents in most metros, so 0.6–0.9% is now the realistic range in many markets, and passing deals cluster in the Midwest and South. At higher interest rates, even a 1% property can cash-flow poorly once taxes and insurance are counted.
That's why the rule should start your analysis, not end it. A 0.85% property with low taxes and a cheap loan can outperform a 1.1% property in a high-tax county. The ratio gets you to the shortlist; the full analysis picks the winner.
The 1% rule vs the 2% rule and 50% rule
The 2% rule — rent at 2% of price — is the aggressive version, mostly achievable only in low-price, high-turnover markets where hidden costs often eat the extra yield. The 50% rule is a companion heuristic: expect about half of gross rent to go to operating expenses before the mortgage. A property that passes the 1% rule and roughly follows the 50% rule usually has room for a mortgage payment.
Use all three as a quick mental stack: ratio first, expense sanity check second, then a real cash-flow calculation with actual taxes, insurance, and loan terms.
Frequently asked questions
Is the 1% rule still realistic?
In high-cost markets it's rare. Treat it as a filter to decide which deals deserve a full analysis.
Does the 1% rule use purchase price or total cost?
Strictly it's purchase price, but if you're doing meaningful renovations, include them — use your all-in cost for a honest screen.
A property passes the 1% rule. Is it a good deal?
Maybe. Passing means it deserves a full analysis: cap rate, cash flow, and cash-on-cash with real expense numbers. Plenty of 1% properties still lose money after taxes, insurance, and repairs.