1% Rule Calculator

Quick rental screening: monthly rent should be ≥ 1% of purchase price.

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Result

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General calculation reads

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How to use this calculator

  • Enter purchase price and expected monthly rent.
  • Read pass/fail.

About this calculator

The 1% rule is a heuristic: monthly rent should be ≥ 1% of purchase price. A $250k house should rent for ≥$2,500/mo. Most modern hot markets fail this — typical Sun Belt or Midwest rentals around 0.7-0.9%. Failing the 1% rule doesn't mean a bad deal, just that cash flow will be slim or rely on appreciation.

Frequently asked

Why 1% specifically?+
It's a rule of thumb that approximates cash-flow positivity at typical interest rates. Doesn't account for taxes, maintenance, or expenses; lower-quality heuristic than NOI / DSCR.
My deal fails 1% — should I walk?+
Not necessarily. Many viable rentals are at 0.6-0.8%. The 1% rule is a screening filter, not a final-decision tool. Run full numbers on borderline deals.
How does the 2% rule differ?+
Stricter: 2% rule requires monthly rent = 2% of price. Almost no markets hit that today. Some investors use it for lower-class neighborhoods where higher cash flow compensates for management headache.
Is the 1% rule out of date?+
Many would say yes — interest rates and prices have decoupled rent from price. But it remains a useful gut-check.
What about appreciation markets?+
Appreciation markets (CA, NY) almost never hit 1%. Investors there bet on property value growth instead of monthly cash flow.

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