Free Tool
1% Rule Calculator for Rental Property
Check in seconds whether a rental's monthly rent is at least 1% of its price. Includes rehab costs, the rent you would need, and the maximum price a given rent supports.
| All-in price (purchase + rehab) | — |
| Rent above (below) the target | — |
| Rent needed at 2% | — |
| Gross rent multiplier (price ÷ annual rent) | — |
Assumptions: the rule compares gross monthly rent with purchase price plus rehab. It ignores taxes, insurance, vacancy, maintenance and financing, so treat it as a screen only. Maximum purchase price = rent ÷ target rule − rehab. Estimates only, not advice.
What is the 1% rule in real estate?
The 1% rule is a quick screening shortcut: a rental's gross monthly rent should be at least 1% of its purchase price. A $100,000 property should rent for at least $1,000 a month; a $200,000 property for $2,000. The rule is meant to filter listings in seconds, before you do any detailed math. This calculator adds any rehab or repair money to the price, which is how many investors apply it to properties that need work. When a property passes the screen, run the full numbers in the rental property ROI calculator.
Worked example with the default inputs
- Purchase price $180,000 + rehab $20,000 = all-in price of $200,000.
- 1% of $200,000 = $2,000 a month needed.
- Expected rent is $2,100, so rent ÷ price = $2,100 ÷ $200,000 = 1.05%. That meets the 1% rule, by $100 a month.
- Working backwards, $2,100 of rent supports an all-in price of up to $210,000, which means a maximum purchase price of $190,000 after $20,000 of rehab.
- Gross rent multiplier = $200,000 ÷ $25,200 = 7.94.
Is the 1% rule reliable?
It is a screen, not an analysis. Passing the 1% rule does not mean a property is profitable, and failing it does not mean it is not. It ignores property taxes, insurance, vacancy, maintenance, financing costs and local conditions. In many expensive markets few properties meet it, while in some cheap markets properties that meet it carry high vacancy, repair or neighborhood risk. Some investors use a related 2% rule (rent of 2% of price), which is far rarer. At this calculator's defaults the 2% line is $4,000 a month. Treat these as filters for deciding what deserves a closer look.
What to check after a property passes
- The cap rate, which accounts for taxes, insurance and operating costs.
- The monthly cash flow after the mortgage and reserves.
- The cash-on-cash return on the cash you would actually invest.
- Whether the rent estimate is supported by real comparable listings, not just an online estimate.
Frequently asked questions
What is the 1% rule for rental properties?
It says monthly gross rent should be at least 1% of the purchase price. For example a $200,000 property should rent for $2,000 a month or more. It is a quick screening rule, not a measure of profit.
Does the 1% rule use the purchase price or the all-in price?
Many investors use the total of the purchase price plus rehab or repair costs, since that is what the property really costs them. This calculator does that. Set rehab to zero if you want the plain purchase-price version.
Is the 1% rule realistic today?
In many higher-priced markets few properties meet it, because prices have risen faster than rents. It remains easier to find in lower-priced markets, which may bring other risks. Use the target rule field to test a lower threshold if you want a looser screen.
What is the 2% rule?
A stricter version of the same idea: monthly rent equal to at least 2% of price. It is rare and usually found only in very cheap markets or properties needing significant work.
What is the difference between the 1% rule and cap rate?
The 1% rule compares gross rent with price and ignores all costs. Cap rate compares net operating income, after vacancy and operating costs, with price. Cap rate is the more complete measure.
Can a property fail the 1% rule and still be a good investment?
Yes. The rule ignores financing, expenses and appreciation, so a property that fails it can still produce reasonable returns in the right market. Use it as a filter, then run the full numbers. This is general information, not advice.
Related rental property calculators
- Rental Property ROI Calculator — the hub: cash flow, cash-on-cash, cap rate, total ROI and the 1% rule in one place.
- Cash-on-Cash Return Calculator — annual cash flow divided by the cash you actually invested.
- Cap Rate Calculator — net operating income divided by price, independent of financing.
- Rental Property Cash Flow Calculator — monthly income, expenses, mortgage, break-even rent and DSCR.
- Airbnb vs Long-Term Rental Calculator — compare short-stay income to a standard lease.
- Rental Income & Expense Spreadsheet and Rental Property Expense Tracker — track the real numbers once you own the property.
Want the full system, not just this one number?
This calculator screens one deal at a time. The Rental Property Manager Toolkit tracks rent, expenses, tenants, and maintenance across up to 8 properties, with a dashboard that shows real cash flow and net income as they actually happen — not just projected at purchase.
One-time purchase. No subscription.
Not ready to buy? Grab the free income & expense tracker (Excel, no signup) to log rent and costs, or read about the free tracker here.
Need a spreadsheet built around your exact business instead? We build custom workbooks to order — $99, delivered in 5 business days.