1% Rule Calculator

Check a rental against the real estate 1% rule.

Purchase price

Monthly rent

Results update as you type.

1% rule target rent

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Actual rent-to-price—

How it works

The 1% rule is a fast rule of thumb real estate investors use to screen rental properties, and this calculator checks any property against it. You enter the purchase price and the expected monthly rent, and it returns the target rent that one percent of the price implies, along with the property's actual monthly rent as a percentage of its price. The rule states that a rental's monthly rent should be at least one percent of the total purchase price for the deal to be worth a closer look; a $200,000 property, for instance, should rent for at least $2,000 a month. Meeting the rule suggests the rent is high enough relative to the price to have a reasonable chance of positive cash flow after expenses and financing, while falling short is a signal to be cautious. The 1% rule is deliberately simple and is meant only as a first-pass filter to quickly weed out overpriced properties, not as a substitute for detailed analysis. In many expensive markets, few properties meet it, and investors there may use a lower threshold. Always follow up with full calculations of cash flow, cap rate, and return before buying. Enter the purchase price and monthly rent to check the property against the 1% rule.

Formula

Target rent = purchase price × 1%

The 1% rule says a rental property's monthly rent should be at least one percent of its purchase price. The calculator multiplies the price by one percent to give the target rent and also computes the actual rent as a percentage of price. If the actual figure meets or exceeds one percent, the property passes this quick screen.

Source:Real estate investing

We review all our tools from time to time to ensure accuracy.

Worked example

Purchase price:200000Monthly rent:2000

1% of $200,000 = $2,000 target; rent is exactly 1.0%, so it passes.

How to use this calculator

1
Enter your values
Enter purchase price and monthly rent.
2
Adjust the options
Fine-tune any options to match your situation.
3
Read your result
1% rule target rent updates instantly as you type — no button to press.

Frequently asked questions

What is the 1% rule in real estate?

The 1% rule is a rule of thumb stating that a rental property's monthly rent should be at least one percent of its purchase price. A property meeting this threshold has a reasonable chance of positive cash flow. It is a quick screen to filter deals, not a guarantee of profitability or a substitute for full analysis.

How do I apply the 1% rule?

Multiply the purchase price by one percent to get the target monthly rent, then compare it to the actual expected rent. If the rent meets or exceeds the target, the property passes. For a $200,000 home, the target is $2,000 a month. The calculator computes the target and the actual rent-to-price percentage for you.

Is the 1% rule realistic today?

In many high-cost markets, few properties meet the 1% rule because prices have risen faster than rents. Investors there often use a lower threshold, such as 0.7 or 0.8 percent, adjusted for local conditions. The rule remains a useful quick filter, but it should be adapted to your market rather than applied rigidly everywhere.

Does passing the 1% rule mean a property is profitable?

Not necessarily. The 1% rule ignores property taxes, insurance, maintenance, vacancy, management, and financing costs, which all affect real cash flow. A property can pass the rule yet lose money after expenses, or fail it yet still work in a low-cost, low-tax area. Always run a full cash-flow analysis before buying.

What is the difference between the 1% and 2% rule?

The 2% rule is a stricter version requiring monthly rent to be at least two percent of the purchase price. Properties meeting it are rare and usually in lower-priced markets with higher risk. The 1% rule is the more common, achievable screen, while the 2% rule targets very high cash-flow deals that are hard to find.