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The 1% rule is a back-of-envelope screen: monthly rent should be at least 1% of purchase price. It's not an underwriting tool — it's a filter that tells you which properties deserve a real analysis.
These are estimates from the numbers you entered. Want them calculated from real comparable rentals for a specific address?
Run a free CMA →The 1% rule says a rental should produce monthly rent equal to at least 1% of its purchase price. A $250,000 house should rent for $2,500. It's the fastest filter in real estate investing — you can run it in your head on a listing while you're still scrolling.
It is a screen, not an analysis. The rule exists because properties that clear 1% usually have enough gross income to survive a normal expense load and still cash flow. Properties well below it usually don't. That's the entire claim — it says nothing about neighborhood quality, capital expenditures, rent growth, or your financing.
In much of the country, no. Price growth outran rent growth through the 2020s, and in most major metros the 1% rule became unachievable for anything in decent condition. Where you'll still find it:
In coastal and high-growth metros, 0.4–0.6% is common and investors there are explicitly buying appreciation rather than cash flow. That's a legitimate strategy — it just isn't the strategy the 1% rule was built to screen for.
Rather than treating 1% as pass/fail, use it as a sorting mechanism. Screen a list of properties, rank by ratio, then run a full underwrite on the top handful. A 0.85% property in a strong market with low taxes can easily outperform a 1.1% property in a market with 3% property tax rates and heavy turnover.
The rent number drives everything above. CompPilot pulls actual comparable rentals for any US address and returns a defensible rent range — plus cap rate, DSCR, cash flow, and a written market memo.
Get a free rental analysis →In most major metros, no — price appreciation outpaced rent growth for years. It remains achievable in parts of the Midwest and South, in small multifamily, and in value-add deals where rents are currently below market. Treat it as a relative ranking tool rather than a hard threshold.
The same idea at double the threshold — monthly rent equal to 2% of purchase price. In today's market it's essentially extinct outside of very low-priced properties, which typically come with the operational headaches that explain the price.
No, and that's its main weakness. Two properties can both hit exactly 1% while one has $3,000 in annual property taxes and the other $9,000. The rule screens gross income only — everything that determines actual profitability happens downstream of it.
Use it to filter, then underwrite the survivors properly with cash flow, cap rate, cash-on-cash return, and DSCR. The 1% rule takes ten seconds and a real analysis takes ten minutes — the point of the rule is deciding which properties earn the ten minutes.
If you run a real estate blog, brokerage, lending, or property management site, you can embed this 1% rule calculator free — two lines of HTML, no API key, no signup, unlimited page views. All the math runs in the visitor's browser, and it renders in an isolated shadow root so it can't collide with your site's styles.
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