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1% Rule Calculator
The fastest triage in real estate: does monthly rent clear 1% of your all-in cost? Enter price, rehab, and rent to test the 1% rule, 2% rule, and gross rent multiplier at once.
Educational calculators — always consult a licensed professional before making financial decisions.
The price you'd pay for the property.
Included in the all-in cost. Enter 0 if move-in ready.
Total gross rent across all units.
Rent-to-Price
0.85%
$2,200/mo on $260,000 all-in
The Screen
This is a screen, not a verdict. The 1% rule ignores expenses, financing, taxes, and appreciation. Use it to triage listings fast, then run the ones that pass through the cap rate and cash-flow tools.
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How to use the 1% rule (and when to ignore it)
The 1% rule is a triage test, not an analysis. It asks a single question: is the monthly rent at least 1% of everything you'll put into the property — purchase price plus any rehab? A $250,000 all-in property clears the rule at $2,500/month. Because it's built from two numbers you already know, it lets you screen dozens of listings in minutes and decide which deserve real underwriting.
Its blind spots matter. The 1% rule ignores property taxes, insurance, maintenance, management, vacancy, financing, and appreciation entirely. Two properties can both clear 1% while one cash-flows beautifully and the other bleeds money on high taxes or HOA fees. In expensive, appreciation-driven markets, strong long-term investments routinely fail the 1% rule — so a miss is a reason to look closer, not to walk away. The 2% rule is the stricter cousin and is mostly aspirational today; treat any listing that appears to clear it with healthy skepticism about the rent assumption.
GRM adds nuance. The gross rent multiplier — all-in cost divided by annual gross rent — expresses the same idea on a different scale, where lower is better and roughly 4–7 is attractive. Once a property passes the screen, move to a cap rate and cash-on-cash analysis, which actually account for expenses and financing.
How it works
Enter price and rehab
Input the purchase price and any upfront repair budget for the all-in cost.
Enter expected rent
Add the total gross monthly rent across all units.
Read the screen
See pass/fail on the 1% and 2% rules, plus the gross rent multiplier.
Rent needed to pass the 1% rule by all-in cost
| All-in cost | 1% rule rent | 2% rule rent |
|---|---|---|
| $150,000 | $1,500/mo | $3,000/mo |
| $250,000 | $2,500/mo | $5,000/mo |
| $350,000 | $3,500/mo | $7,000/mo |
| $500,000 | $5,000/mo | $10,000/mo |
The 1% rule ignores expenses, financing, and appreciation — use it to triage, then analyze cap rate and cash flow.
Frequently asked questions
What is the 1% rule in real estate?+
The 1% rule is a quick screening test: a rental property's monthly rent should be at least 1% of the total amount you put into it (purchase price plus any rehab). For a $250,000 all-in property, that means about $2,500 a month in rent. It's a fast way to triage listings before doing detailed analysis — properties that clear it are worth a closer look, and those that miss it by a lot may struggle to cash-flow.
Is the 1% rule still realistic?+
In many high-priced markets it's hard to hit, and that alone doesn't disqualify a deal — appreciation-focused markets routinely fall short of 1% yet still make money over time. Treat the 1% rule as a screen, not a verdict. It ignores operating expenses, financing, taxes, and appreciation, so a property that passes can still be a poor deal, and one that fails can still be a good one after full analysis.
What is the 2% rule?+
The 2% rule is a stricter version — monthly rent of at least 2% of all-in cost. It's largely aspirational today and mostly appears in low-price, higher-risk markets. If a listing appears to clear 2%, verify the rent is real and sustainable before getting excited.
What is a good gross rent multiplier (GRM)?+
GRM is the property price divided by annual gross rent — the lower, the faster the rent pays back the price. A GRM of roughly 4–7 is generally considered attractive; higher figures are common in major cities, while a GRM above about 10 often signals overpricing relative to rent. Like the 1% rule, GRM ignores expenses, so it's a screening tool rather than a full measure of return.
Passed the screen? Run the real numbers.
Back to the calculator ↑Cost ranges and rates here are checked against contractor quotes and published industry data. If a number still looks off, email Support@RealCostIQ.com and we'll review and fix it.