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1% Rule Calculator for Rental Property
The 1% rule says a rental property's monthly rent should be at least 1% of its purchase price. A $200,000 home should rent for about $2,000 per month to pass. It's a quick screening filter, not a full analysis — properties that pass still need a complete cash-flow check before you buy.
Monthly Rent ÷ Purchase Price ≥ 1% (Rent needed = Price × 0.01)
How it works
The 1% rule is a fast first filter for rental properties. Multiply the purchase price by 1% to get the monthly rent a property should command to be worth a closer look. If the actual rent is well below that, the deal likely won't cash-flow once you account for the mortgage, taxes, insurance, and maintenance.
Like the 70% rule for flips, it's a screening shortcut — not a substitute for running real numbers. In expensive markets very few properties hit 1%, so investors there often use a lower threshold and rely on full cash-flow analysis instead.
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Get started freeFrequently asked questions
- What is the 1% rule in real estate?
- The 1% rule states that a rental property's monthly rent should be at least 1% of its purchase price. A $200,000 property should rent for around $2,000 per month to pass the screen.
- Is the 1% rule still realistic?
- It's harder to meet in expensive markets, where many solid rentals fall below 1%. It remains a useful quick filter, but it's a starting point — always confirm with a full cash-flow and cash-on-cash analysis.
- What's the difference between the 1% and 2% rule?
- Both are rent-to-price screens. The 2% rule (rent ≥ 2% of price) is a much stricter bar found mainly in low-cost, higher-risk markets, while the 1% rule is the more common general benchmark.