1% Rule Calculator for Rental Property - Rental Flow
Landlord Calculator

1% Rule Calculator

A 10-second gut check for any rental: does the monthly rent clear 1% of the purchase price? If it does, the deal is worth a closer look.

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Opens live in the Rental Flow app, no account needed.

What this calculator does

The 1% rule is a quick screen, not a full analysis. It says that for a rental to be worth deeper diligence, its monthly rent should be at least 1% of the all-in purchase price. It won't tell you whether a deal is good (cap rate and cash-on-cash do that), but it's a fast way to filter a long list down to the few worth modeling in detail.

The formula

Rent-to-price ratio = Monthly Rent ÷ Purchase Price  →  passes if ≥ 1%

Worked example

$220,000 property renting for $2,000/month

Purchase price$220,000
Monthly rent$2,000
Rent-to-price ratio0.91%
ResultBelow the 1% rule

At $2,000 rent this property falls just short. It would need about $2,200/month (or a lower price) to clear the bar. In hot markets very few properties pass the 1% rule, so treat it as one input, not a hard cutoff.

What is the 1% rule in real estate?

The 1% rule is a quick screen that asks whether a property's monthly rent is at least 1% of its purchase price. A $200,000 home would need to rent for about $2,000 a month to pass. It is a rule of thumb for spotting potential cash-flow deals fast, not a guarantee of profit.

In many higher-priced markets, very few properties clear the 1% rule, so investors there often use it as a relative gauge rather than a hard cutoff. Treat passing as a reason to look closer, and failing as a reason to be careful, then confirm with a full cap rate or cash-on-cash analysis.

Try it with your own numbers →

Frequently asked questions

In many expensive markets, very few properties meet the 1% rule, so it is increasingly used as a relative screen rather than a strict requirement. In cheaper cash-flow markets it remains a useful quick filter. Either way it is a starting point, not a decision.
Both compare monthly rent to purchase price. The 1% rule looks for rent of at least 1% of price; the stricter 2% rule looks for 2%. Properties meeting 2% are rare and usually sit in higher-risk markets, so most investors treat 1% as the practical benchmark.
No. The 1% rule only compares rent to price and ignores taxes, insurance, maintenance, and financing. A property can pass the 1% rule and still lose money once expenses are counted, which is why you should always follow up with a full analysis.
Divide the monthly rent by the purchase price. If the result is 1% or more, the deal is worth a closer look. If it falls short, the property may still work in an appreciation play, but you should scrutinize the numbers before proceeding.