1% Rule Calculator
The 1 percent rule asks one question: is monthly rent at least 1% of the price? Enter a price and a rent to see where a property lands, and what rent the rule would require.
The 1% rule screen
Read this carefully
The 1% rule was a rough screen from an era of much lower prices and rates, and in most US metros today very few listings clear it. Failing it is normal and is not by itself a reason to walk away — plenty of properties below 1% still cash-flow once you account for the actual taxes, rate, and down payment.
What it's genuinely good for is triage: ranking a long list in seconds so you know which few deserve a real analysis.
How to calculate the 1% rule
Monthly rent ÷ Purchase price × 100 = percent of pricePass the test and that figure is 1.00% or higher. A $235,000 property renting at $2,400 a month works out to 2,400 ÷ 235,000 × 100 = 1.02% — just over the line.
It's often more useful run backwards. Multiply the price by 0.01 for the rent the rule wants, or multiply the monthly rent by 100 for the highest price the rule would support. At $2,400 of rent, that ceiling is $240,000.
Rent the 1% rule requires, by price
What a property at each price would have to rent for to pass, and what the stricter 2% version would demand.
| Purchase price | Rent for 1% | Rent for 2% | Annual gross rent at 1% |
|---|---|---|---|
| $100,000 | $1,000 | $2,000 | $12,000 |
| $150,000 | $1,500 | $3,000 | $18,000 |
| $200,000 | $2,000 | $4,000 | $24,000 |
| $250,000 | $2,500 | $5,000 | $30,000 |
| $300,000 | $3,000 | $6,000 | $36,000 |
| $400,000 | $4,000 | $8,000 | $48,000 |
| $500,000 | $5,000 | $10,000 | $60,000 |
Set against real rents, the table explains why so few listings pass today: a $400,000 house would need $4,000 a month, which is far above market rent for that price point in most of the country.
What the rule can't see
Everything that decides cash flow, essentially. The 1% rule knows only price and rent, so it can't see property taxes — which vary enough between states to swing a deal on their own — nor insurance, HOA dues, your interest rate, or how much you put down.
That produces both false positives and false negatives. A property that clears 1% in a high-tax area with an expensive insurance market can still lose money every month, while one at 0.8% with low carrying costs and 30% down can cash-flow comfortably.
Treat a pass as "worth a closer look" rather than "good deal." The full rental property calculator takes the same property through real expenses and financing to a buy/pass verdict, and the expense list covers what the rule leaves out.
Frequently asked questions
What is the 1% rule in real estate?
The 1% rule says a rental property's monthly gross rent should be at least 1% of its purchase price. A $200,000 property would need to rent for $2,000 a month to pass. It's a screening shortcut used to sort a long list of listings quickly, not a measure of whether a property actually makes money.
How do you calculate the 1% rule?
Divide the monthly rent by the purchase price and multiply by 100. A $235,000 property renting at $2,400 a month gives 2,400 ÷ 235,000 × 100 = 1.02%, so it passes. Working the other way, multiply the price by 0.01 to get the rent the rule requires, or multiply the monthly rent by 100 to get the highest price the rule would support.
Does the 1% rule still work in 2026?
As a pass/fail test, largely no — home prices have risen much faster than rents in most US metros, so very few listings clear 1% today outside lower-cost Midwest and Southeast markets. It remains useful as a relative screen: comparing two properties' percentages tells you which is priced better against its rent, even when both are under 1%.
Is the 1% rule the same as the 2% rule?
They're the same test at different thresholds. The 2% rule asks for monthly rent equal to 2% of the price and is far more demanding — in most markets it only appears in low-priced properties that carry higher risk, heavier maintenance, or weaker tenant demand. Both are screens rather than analyses.
Should I skip a property that fails the 1% rule?
Not on that basis alone. The rule ignores property taxes, insurance, your interest rate, and your down payment — all of which decide whether a property cash-flows. A property at 0.8% with low taxes and a large down payment can out-earn one at 1.1% in a high-tax area. Use the rule to decide what to analyze, then let the full analysis decide what to buy.
What's the difference between the 1% rule and the 50% rule?
The 1% rule screens the purchase price against rent. The 50% rule screens expenses, assuming operating costs run about half of gross rent before the mortgage. They answer different questions and are often used together: the 1% rule asks whether the price is sane, the 50% rule asks whether the expense budget is realistic.