One Percent Rule
Calculator
Results
- Rent-to-price ratio
- 0.818181%
- Minimum rent to meet the 1% rule
- $2,200.00
- Meets 1% rule (1 = yes, 0 = no)
- 0
Results
| Rent-to-price ratio | 0.818181 |
| Minimum rent to meet the 1% rule | 2,200 |
| Meets 1% rule (1 = yes, 0 = no) | 0 |
formula-map diagram
- Rent-to-price ratio
- 0.818181%
- Minimum rent to meet the 1% rule
- $2,200.00
- Meets 1% rule (1 = yes, 0 = no)
- 0
Diagram
Formula
Rule % = monthly rent ÷ price × 100 (screen: ≥ 1%)= 0.81818181818182
Note
This is a simplified model for informational purposes only; consult a licensed professional before making a financial decision.
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See all →Frequently asked questions
What exactly does the 1% rule check for?+
The 1% rule is a quick screening test stating that monthly rent should be at least 1% of the property's purchase price — for example, a $200,000 property should rent for at least $2,000 per month to pass. It's meant for rapid comparison, not a final investment decision.
Why do so few properties meet the 1% rule in expensive markets?+
The 1% rule tends to fail in high-appreciation coastal and urban markets where prices have risen faster than rents, while it's easier to meet in lower-cost, cash-flow-focused markets in the Midwest and South. It reflects a cash-flow-oriented strategy, not a universal standard for all markets.
If a property fails the 1% rule, does that mean it's a bad investment?+
Not necessarily — it may still be a strong investment if it's expected to appreciate significantly, which the 1% rule doesn't account for at all. The rule is a rough cash-flow filter, and appreciation-focused investors in strong markets routinely buy properties that fail it.
Does the 1% rule account for expenses like taxes, insurance, and maintenance?+
No — it's a gross, back-of-envelope calculation using rent and price only. A property that technically 'passes' can still have negative cash flow once real operating expenses and the mortgage payment are factored in, so it should be followed by a full cash flow analysis.
How does the 1% rule differ from the 2% rule?+
They use the same formula — monthly rent as a percentage of price — but the 2% rule sets a much higher bar, which is rarer to find and is generally associated with higher-risk, lower-appreciation markets or properties needing significant work. Neither threshold is inherently 'correct'; they're just different risk/return screening levels.