1% Rule Calculator for Rental Properties

What Is the 1% Rule?

The 1% rule is the most widely used quick-filter in rental property investing. It says: if a property's monthly gross rent is at least 1% of the purchase price, the deal is worth analyzing further. Below that threshold, it's unlikely to cash-flow with typical leverage and expenses.

Example: a $200,000 duplex renting for $2,100/month has a rent-to-price ratio of 1.05% — it passes. A $350,000 single-family renting for $2,200/month comes in at 0.63% — it doesn't.

The rule is deliberately crude. It ignores taxes, insurance, vacancy, management, maintenance, and financing. That's the point — it's meant to filter out deals quickly, not to approve them. For the deeper analysis, read our guide on whether the 1% rule is still relevant in 2026.

1% Rule vs. 2% Rule

The 2% rule is the same idea, doubled. Monthly rent should be at least 2% of purchase price. In practice:

• 2%+ deals exist primarily in low-cost markets (parts of the Midwest, South, and Rust Belt) and in Class C/D properties. High gross yield often comes with higher vacancy, turnover, and deferred maintenance.
• 1%–1.5% is the sweet spot for cash-flow investors in secondary markets — enough gross income to cover debt service and expenses with margin.
• 0.6%–0.9% is common in primary coastal and Sun Belt metros. These deals rely more on appreciation and tax benefits than monthly cash flow.

When the 1% Rule Fails

The 1% rule is a blunt instrument. It can lead you astray in both directions:

• False positives: A property that “passes” at 1.2% but has $8,000/yr in deferred maintenance, 15% vacancy, and a flood-zone insurance premium can still be deeply negative on cash flow.
• False negatives: A newer build at 0.85% in a strong school district with 3% annual appreciation, 4% vacancy, and minimal maintenance can outperform a 1.2% deal on total return over 5–10 years.

The fix is straightforward: use the 1% rule as a filter, then run cap rate, DSCR, and cash-on-cash on everything that passes. Will It Flow calculates all of these — plus IRR, equity buildup, and multi-year hold projections — from a single set of inputs. Try the cap rate calculator or DSCR calculator next.

Related Free Calculators

• DSCR Calculator — check if your deal meets lender debt service coverage requirements.
• Cap Rate Calculator — see the unleveraged yield on any deal.
• BRRRR Calculator — model capital recovery on a Buy-Rehab-Rent-Refinance-Repeat deal.
• Mortgage Payment Calculator — monthly P&I with live Freddie Mac rates.

How to Use This Calculator

1. Enter the purchase price — either the asking price or your offer price.
2. Enter the monthly rent — market rent for the property, not what the current tenant pays if it's below market.
3. Optionally add other monthly income — laundry, parking, storage, pet rent, etc.
4. Read the ratio. If it's above 1%, the deal clears the first hurdle. If it's above 2%, verify the numbers are real.