1% Rule Calculator

The classic screen, plus the two numbers it implies

Type a price and a rent. You get the ratio, the rent that would pass the screen, and the price at which the current rent would pass. Then read what the rule cannot see.

The calculator. Free, in your browser, nothing stored.

Purchase price ($)

Monthly rent ($)

Rent-to-price ratio0%

Rent needed to hit 1%$0

Price at which current rent is 1%$0

What the 1% rule says

The 1% rule is the oldest screen in rental investing: a property is worth a closer look if the monthly rent is at least 1% of the purchase price. A $200,000 property should rent for $2,000. That is the whole rule.

It works as a filter because rent-to-price is the raw material of every other return metric. At 1%, gross yield is 12%, which historically left room for expenses and a mortgage with cash flow to spare.

Why almost nothing passes in 2026

Prices rose far faster than rents through the early 2020s, and mortgage rates roughly doubled. In most metros the typical listing now sits between 0.5% and 0.8%. That does not make the rule useless; it makes it a ranking tool. A 0.85% deal deserves attention before a 0.6% one, and anything actually at 1% deserves same-day attention along with skepticism about why.

What the rule cannot see

Taxes and insurance, which vary threefold between states and get reassessed at your purchase price, not the seller's.
Property condition. A 1% property needing a roof and HVAC is worse than a 0.85% turnkey.
Interest rates. The rule was coined when money was cheaper. At 6.5%, even 1% deals can cash flow thin.
Rent accuracy. The ratio is only as good as the rent figure, so verify it against real comparables, not the listing's hope.

Treat a pass as permission to spend twenty minutes on the full arithmetic, never as a reason to offer.

Want the whole picture, not one metric?

The free DealGauge calculator grades any rental A to F across cash flow, cash-on-cash, financeability and cap rate, then solves the most you could pay and still hit your targets. No account, no email, no property limit.

Grade a deal free

Questions

Is the 1% rule dead?

As a pass-or-fail test, mostly. As a ranking screen it still works: rent-to-price remains the raw ingredient of every return metric, and higher is still better.

What about the 2% rule?

A relic of post-2008 pricing and very cheap markets. Properties at 2% today are usually in areas with high vacancy or heavy repair burdens. Verify twice.

What ratio should I look for in 2026?

Many workable deals live between 0.8% and 1%. Below about 0.7%, positive cash flow at common rates usually requires an unusually large down payment.

Calculator All calculators Methodology Guides About Terms Privacy

General information and educational content only, not investment, tax, or legal advice. Benchmarks are common rules of thumb, not guarantees or projected results. Results are estimates from the numbers you enter. Verify every figure and consult a qualified professional before purchasing any property.