1% Rule Calculator for Rental Property (Plus the 50% Rule)

What is the 1% rule?

The 1% rule is a rule of thumb that says monthly rent should be at least 1% of the purchase price, plus repairs.

Monthly rent ÷ (purchase price + repairs) ≥ 1%

A $200,000 property should rent for $2,000 or more to pass. It is a fast filter for skipping weak deals before you spend time on a full analysis.

What is the 50% rule?

The 50% rule says about half of your rental income will go to operating expenses, not counting the mortgage. That covers taxes, insurance, repairs, vacancy and management. Whatever is left has to pay the mortgage and leave you something.

With the numbers filled in, rent is about 0.96% of the price, just under the line. Half of $2,400 is $1,200, but the mortgage is about $1,331, so the estimate shows roughly -$131 a month.

Limits of these rules

• They are shortcuts. Real taxes, insurance and repairs can be far from 50% of rent.
• In expensive markets few properties reach 1%, and in cheap markets many do but carry higher vacancy and repair risk.
• Interest rates change the picture a lot. The same rent can work at one rate and fail at another.

Use these rules to screen, then confirm with the cash flow calculator using your real expenses.

Frequently asked questions

Is the 1% rule still realistic?

It depends on your market and current rates. Many areas have few listings that meet it, so some investors use it as a loose guide rather than a hard cutoff.

Should repairs count toward the price?

Many investors add them, since repairs are part of what you spend to get the property rentable. This calculator does the same.

Does the 50% rule include the mortgage?

No. The 50% covers operating expenses only. The mortgage comes out of the other half.

Keep reading: Cash-on-Cash Return Calculator, Cap Rate Calculator, How to Analyze a Rental Property.