1% Rule Calculator
Screen a rental in seconds — rent-to-price ratio against the 1% and 2% rules, plus a 50% rule cash flow check.
✏️ These numbers were filled in from a shared link — change anything to make it your own.
How the 1% rule works
ratio = monthly rent ÷ (purchase price + rehab)
Clear 1% and the deal is worth a full underwrite. Come in well under and the cash flow case is going to be hard unless you're buying for appreciation. Including rehab in the denominator matters — a cheap property that needs $40,000 of work is not actually cheap.
The 50% rule sanity check
The 50% rule assumes half your gross rent disappears into operating expenses — taxes, insurance, vacancy, maintenance, capex, and management — before you make a single mortgage payment. It's deliberately pessimistic, and it's usually closer to reality than a spreadsheet built on best-case assumptions.
Passed the screen? Underwrite it properly with the Rental Property Calculator or check the Cap Rate Calculator. Flipping instead? Use the 70% Rule Calculator.
A screening heuristic, not an analysis — no rule of thumb replaces real numbers on a real property. General information, not investment advice.
Frequently asked questions
What is the 1% rule in real estate?
The 1% rule says a rental should bring in monthly rent equal to at least 1% of the purchase price (plus rehab). A $200,000 property should rent for $2,000 a month. It is a fast screening filter, not a full analysis — it tells you which deals are worth underwriting properly.
Is the 1% rule still realistic?
In many hot markets, no — properties routinely trade at 0.5–0.7% and investors buy them for appreciation instead of cash flow. The rule is most useful in cash-flow markets and as a relative comparison between deals. Failing it is not automatically a no; it just means the cash flow case needs proving.
What is the 50% rule?
The 50% rule assumes operating expenses — taxes, insurance, maintenance, vacancy, management, capex — will eat about half your gross rent, before the mortgage. It is a sanity check on optimistic expense estimates. This calculator applies it to show a rough cash flow before financing.
What about the 2% rule?
The 2% rule is the same idea at a much higher bar and is rare in today’s market outside low-cost areas or distressed properties. Treat clearing 2% as a signal to look very hard for the catch — deferred maintenance, a rough neighborhood, or rent that will not actually hold.