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1% rule calculator
Enter a price and a monthly rent. You get the ratio, the rent that would clear 1% at that price, the price that would clear it at that rent, and the gross rent multiplier.
Short answer
The 1% rule says monthly rent should be at least 1% of the purchase price, so a $250,000 property should rent for $2,500 a month. It is a screening filter, not an analysis: it ignores property taxes, insurance, vacancy, maintenance, capital reserves and financing entirely. Use it to decide which listings deserve ten minutes of real underwriting, then run cap rate and cash-on-cash on the survivors.
Price plus any rehab you would do before renting it.
Gross rent for one month, before any expenses.
Rent as a percent of price
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Enter a price and a monthly rent.
A one-page list of what to gather before you fill in Schedule E. Occasional landlord tax and product notes, unsubscribe anytime.
What the rule is for
The 1% rule exists because a serious analysis takes ten minutes and a listing page takes ten seconds. If you are working through forty listings, you need something that runs at listing-page speed and is wrong in a predictable direction. That is all this is, and used that way it is genuinely good.
Worked example
Price including rehab: $250,000
Monthly rent: $2,100
Ratio: 2,100 / 250,000 = 0.84%
Rent needed for 1%: $2,500
Price that clears 1% at $2,100: $210,000
Those last two lines are usually the useful ones. A property at 0.84% is not a no. It is a question about whether $2,100 is really the market rent, or whether $210,000 is really the ceiling on what you would pay.
Where it misleads
The rule has no opinion about expenses, and expenses are where rentals are won and lost. Two properties at exactly 1% behave completely differently if one sits in a 2.5% property-tax jurisdiction and the other in a 0.6% one, or if one has a twenty-five-year-old roof. It also says nothing about financing, so a 1% property bought at 8% interest and the same property bought at 5% look identical to the rule and nothing alike in the bank.
It is also market-relative in a way people forget. Strict 1% filtering would have ruled out most high-growth metros for the last decade, including markets where appreciation more than made up the difference. Inside one market it sorts well. Across markets it mostly measures price-to-rent ratios you already know about.
The gross rent multiplier is the same idea, inverted
Gross rent multiplier is price divided by annual gross rent, so 1% monthly is a GRM of 8.33. Commercial listings quote GRM and residential investors quote the 1% rule, but they are the same screen with the fraction turned over. If you are comparing a residential listing against a small commercial one, converting is easier than arguing about which convention is correct.
What to run next
On anything that survives, get real numbers and compute cap rate, which is net operating income over price, and cash-on-cash return, which is annual cash flow over the cash you actually put in. Both calculators are linked below, both are free, and neither needs a signup.
Where this number leads next
The 1% rule for rental property: does it still work in today's market
A ten-second screen, not a buy signal. What the 1% rule measures, where it lands across named metros, and when to switch to real underwriting.
Gross rent multiplier: what GRM tells you and what it hides
The GRM formula, a worked duplex example, the 4 to 7 band, and the failure case where two identical GRMs cash flow opposite ways.
The 50% rule in real estate: what it gets right and where it breaks
A back-of-envelope screen that assumes half of rent goes to operating expenses. Where 50% holds, and where it over- and under-shoots.
How to analyze a rental property deal: a complete worked example
One duplex, taken from list price to an offer: rent verification, the 1% and 50% screens, line-item expenses, NOI, cap rate, cash-on-cash, and reserves.
You don't have to run this by hand.
Once a property is yours, the rule stops mattering and the ledger starts. rents.ai tracks what each property actually earns against what you actually spend, per property, all year.