Check a rental against the 1% rule — monthly rent should be at least 1% of the price — a fast first screen before you run the full numbers.
A rough screening heuristic, not a buy signal — it ignores expenses, financing, condition, and location. Many strong markets rarely hit 1%; treat a pass as "worth a closer look," not a decision. Not investment advice.
The 1% rule is a back-of-envelope filter: if monthly rent is at least 1% of the all-in price, the deal is worth underwriting properly. It's designed to reject obvious non-starters fast, not to confirm a purchase — a property can pass and still lose money, or fail and still be a great appreciation play.
Passes if: monthly rent ÷ purchase price ≥ 1%
The rule says a rental should bring in monthly rent equal to at least 1% of its all-in price, purchase plus any rehab. A $200,000 property needs $2,000 a month. Its only purpose is speed: you can apply it to fifty listings in ten minutes and throw out the ones that cannot possibly work. It says nothing about expenses, taxes, financing, or condition, so a pass is a reason to keep reading, never a reason to buy.
Price $200,000, rent $1,800. The rent-to-price ratio is 0.90%, a fail. The calculator shows the two ways to fix it: rent would need to reach $2,000, or the price would need to drop to $180,000 at this rent. Both are useful as negotiating anchors. The question the rule cannot answer is whether the property at $180,000 actually cash-flows, and at today's rates the answer is often “barely.”
Take a property that exactly meets the rule: $200,000 price, $2,000 rent, 20% down. With a 30-year loan at 4%, the $160,000 mortgage costs about $764 a month; after realistic operating expenses of around 40% of rent ($800), cash flow is roughly $436 a month. At 7% the same loan costs about $1,064, and cash flow falls to roughly $136. One vacancy or one water heater erases a year of it. That is why experienced investors in higher-rate markets have quietly moved their screen toward 1.2–1.5%, or skip the rule entirely and go straight to cash flow and DSCR.
Use the 1% rule to cut a list of listings down to a handful. Run each survivor through a full cash-flow analysis with real expense lines, financing at the rate you can actually get, and a DSCR check. Then compare the two or three that survive that step side by side, which is spreadsheet work: a deal analyzer with a rent-versus-price sensitivity grid shows you in one glance how much room a deal has before it stops working. For the screening step itself, the free one-sheet deal screener runs all four numbers on a listing in under a minute.
In many hot markets, few properties hit 1% — it's harder than it was. Use it as a relative screen within a market, and lean on cap rate and cash-on-cash for the real decision.
A stricter version for higher-risk, higher-cash-flow markets. Properties hitting 2% are rare and usually come with more management or risk.
Related: cap rate calculator · cash-on-cash return calculator · rental yield calculator · all free calculators.
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Yes. The 1% Rule Calculator is completely free, runs in your browser, and never asks for a signup, email, or download. Enter your numbers and the result updates instantly.
It uses standard formulas and recalculates the moment you change a value, so the math is exact for the inputs you enter. Treat the result as a reliable planning estimate; for decisions with legal or tax consequences, confirm the figures with a qualified professional.
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Last reviewed: September 2026. Free to use, no signup — 1% Rule Calculator by ToolWise Digital.
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