1% Rule Calculator
Screen any rental in seconds — check the rent-to-price ratio against the 1% and 2% rules, plus the 50% rule and gross rent multiplier.
Inputs
Rent-to-Price Ratio
0.80%
Below the 1% rule
Rent for 1%
$2,500
Rent for 2%
$5,000
Max Price for 1%
$200,000
Gross Rent Multiplier
10.4x
Est. NOI (50% rule)
$1,000/mo
Your Rent vs Targets
Smart Insights
At 0.8%, this property is below the 1% rule. To hit 1% you'd need rent of about $2,500/month, or a purchase price under about $200,000.
The 1% rule is only a quick screen, not a verdict. In high-cost, high-appreciation markets almost nothing hits 1% — many investors there accept lower cash flow for stronger appreciation. Always run the full cash-flow numbers.
A related heuristic, the 50% rule, assumes about half your rent goes to operating expenses — roughly $1,000/month of NOI here before the mortgage. Use it as a sanity check against your detailed expense estimate.
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How to Use This Calculator
Enter the purchase price, any rehab cost, and the expected monthly rent. The calculator shows your rent-to-price ratio, whether it meets the 1% and 2% rules, the rent or price that would hit 1%, the gross rent multiplier, and a quick 50% rule NOI estimate — updating as you adjust.
A Filter, Not a Decision
The 1% rule exists to save you time: if a property is far below it, you can usually move on without a full analysis. But passing it guarantees nothing — financing, property taxes, insurance, vacancy, and maintenance all determine whether a deal actually makes money. Use this to shortlist, then run the full numbers on the rental property calculator before you commit.
Frequently Asked Questions
What is the 1% rule in real estate?
The 1% rule says a rental property’s monthly rent should be at least 1% of the total purchase price (plus rehab). A $200,000 all-in property should rent for about $2,000/month. It is a fast screen to decide whether a deal is worth analyzing further.
Is the 1% rule still realistic?
In many expensive, high-appreciation markets, almost no property hits 1% — investors there accept lower cash flow for stronger appreciation. In lower-cost markets, 1% (or more) is achievable. Treat it as a quick filter, not a pass/fail verdict.
What is the 2% rule?
A stricter version: rent should be 2% of price. Properties meeting it are rare and usually in lower-cost or higher-risk areas. It signals strong potential cash flow but warrants extra due diligence on the neighborhood and tenant quality.
What is the 50% rule?
A rule of thumb that about 50% of rental income goes to operating expenses (taxes, insurance, maintenance, vacancy, management) — excluding the mortgage. It gives a fast NOI estimate before you build a detailed expense budget.
Should I buy a property just because it passes the 1% rule?
No. These rules are screens, not substitutes for analysis. A property can pass the 1% rule and still lose money after a full accounting of expenses, vacancy, and financing — always confirm with a complete cash-flow calculation.