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1% Rule Calculator

Check a rental against the 1% rule: does monthly rent reach at least 1% of the total purchase-plus-rehab price?

Purchase price

Rehab / upfront costs

Expected monthly rent

Rule threshold

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How it works

Rent-to-price ratio = monthly rent ÷ (price + rehab) × 100 · Passes if ratio ≥ threshold (typically 1%) · Rent needed = (price + rehab) × threshold%

The 1% rule is a five-second gut check: monthly rent should be at least 1% of the all-in purchase price. It is a proxy for cash flow — properties that meet it usually have enough rent relative to price to cover the mortgage and expenses with something left over. It is only a screen, not a guarantee: it ignores interest rates, property taxes and local expense levels, all of which vary enormously by market. In many expensive metros almost nothing hits 1%, while in cheaper markets 1%+ deals are common.

Worked example

A $200,000 house with no rehab that rents for $1,800 a month has a rent-to-price ratio of 1,800 ÷ 200,000 = 0.9%. That falls just short of the 1% rule, which would require $2,000 in rent. It merits a closer cash-flow look rather than an automatic pass.

Frequently asked questions

Is the 1% rule still realistic?

It depends entirely on the market. In lower-cost regions of the U.S., 1% and even 2% deals still exist. In high-price coastal metros, rent-to-price ratios of 0.4–0.6% are common, so investors there rely on appreciation and use the rule only as a relative comparison.

Should rehab be included in the price?

Yes, if you plan to renovate before renting. Your true basis is what you pay plus what you spend to make it rentable, so measuring rent against purchase-plus-rehab gives a more honest ratio than price alone.

Does passing the 1% rule mean positive cash flow?

Usually it points that way, but not always. A property can clear 1% yet still lose money if property taxes, insurance or the interest rate are unusually high. Always confirm with a full cash-flow calculation before buying.

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Educational estimate, not financial or investment advice. Real returns depend on financing, local costs and market conditions.