Does the rent clear 1% of the price?
The fastest screen in rental investing: monthly rent should be at least 1% of everything you put into the property. Enter three numbers and see the ratio, the target rent, and how far above or below the line you land.
The deal
Total investment adds rehab to the price, so a fixer that needs work has to earn a higher rent to pass.
What this tells you
How the ratio moves with price
The screen at a glance
Rent targets for this price
Required monthly rent at each ratio, based on your total investment of $0.
| Rule | Ratio | Required monthly rent | Your rent vs target |
|---|
The 1% rule, explained
The 1% Rule Explained
Quick screening rule: monthly rent should be at least 1% of purchase price. $150k property should rent for $1,500+/month. If yes, deeper analysis. If no, usually skip.
Why It Works (Roughly)
1% rent-to-price typically produces breakeven cash flow at standard 25% down + market interest rate. Properties below 1% usually generate negative cash flow once you account for all expenses.
Where It Fails
High-tax states inflate expenses (look at after-tax cash flow). High insurance areas (FL, CA) need higher rent ratio. HOA fees absent from this rule entirely.
Market Reality 2025
1% properties are rare in major US metros. Most coastal cities run 0.4-0.7%. Midwest and South still offer 1%+ in many markets. Adjust expectations by region.
Common questions
Where can I still find 1% properties?
Midwest (OH, MI, IN), South (TN, AL, MS), and some PA/NY upstate markets. Major coastal cities rarely qualify.
Should I buy if it fails the rule?
Maybe, if appreciation potential is strong, tax benefits compensate, or you can value-add. Don't expect cash flow.
Is the 2% rule real?
Used in some lower-priced markets (sub-$100k). Hard to find now. Usually indicates low-quality area with management challenges.
Does this work for STRs?
No, short-term rentals operate differently. Use STR revenue projections, not the 1% rule.
Does this account for HOA?
No, straight rent vs price. Subtract HOA when comparing to other properties.
The 1% rule is a fast screen, not a full analysis. It ignores property tax, insurance, HOA, vacancy, management and financing terms. Always follow a passing deal with a full cash-flow analysis before you buy.