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1% Rule Calculator Canada
Almost no Toronto or Vancouver rental clears the 1% rule — but the screen still helps you rank deals and spot the rare cash-flow property. Test the 1% rule, 2% rule, and GRM.
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
0.50%
$2,600/mo on $515,000 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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The 1% rule in a low-yield market
The 1% rule tests whether monthly rent reaches 1% of your all-in cost (price plus rehab). In Canada, where prices in major cities have far outpaced rents, the vast majority of properties fail it — a $700,000 condo would need $7,000/month in rent to pass. That doesn't make Canadian real estate a bad investment; it reflects a market where returns come largely from appreciation and mortgage paydown rather than day-one cash flow.
Use the screen to rank opportunities and to flag the occasional secondary-market or multi-unit property that actually cash-flows. Then confirm with the real numbers: a Canadian rental carries a 20% minimum down payment and no CMHC insurance, so financing weighs heavily. Move winners to the cap rate and cash-on-cash calculators.
How it works
Enter price and rehab
Input the purchase price and any upfront repairs for the all-in cost.
Enter expected rent
Add the total gross monthly rent.
Read the screen
See 1%/2% rule pass-fail and gross rent multiplier.
Why most Canadian rentals miss the 1% rule
| All-in cost | Rent needed for 1% | Typical actual rent |
|---|---|---|
| $500,000 | $5,000/mo | $2,400–2,800/mo |
| $700,000 | $7,000/mo | $2,800–3,400/mo |
| $900,000 | $9,000/mo | $3,400–4,200/mo |
Big-city Canadian rents fall far short of 1% — returns come from appreciation and paydown, not day-one 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.
Run your next deal through the 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.