1% Rule Calculator
The 30-second filter for rental properties. If monthly rent ≥ 1% of purchase price, the deal is worth a closer look. If not, move on.
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The fastest filter in the BiggerPockets toolbox.
The 1% rule says: monthly rent should be at least 1% of purchase price. On a $200,000 property, you'd want monthly rent of $2,000+. Below that, the property likely won't cash flow once you factor in financing, taxes, and op-ex. Above it, the deal deserves a closer look — full cap rate, DSCR, and CoC analysis.
It's a rule of thumb, not a precise model. Two properties both hitting 1.1% can have very different cash flow once you adjust for op-ex assumptions (newer building vs. 1970s flip), financing terms (15-year vs. 30-year), and vacancy expectations (urban core vs. mid-tier suburb). But for filtering 50 listings down to 5, it's the fastest possible cut.
In 2026 the 1% rule is harder to find than 5 years ago. Most coastal markets and many Sunbelt cities settle around 0.5–0.8%. Investors targeting cash flow have moved to secondary Midwest markets (Memphis, Indianapolis, Birmingham, Detroit) where 1%+ is still common — at the cost of slower appreciation and weaker tenant demographics.
- Purchase price: $200,000
- Monthly rent: $2,100
- Ratio: $2,100 ÷ $200,000 = 1.05%
- Verdict: PASS (above 1%)
Yes, as a filter — but the bar is harder to clear. Pre-2020, the 1% rule was achievable in most of the US. Post-COVID home price appreciation moved the median property below 1% in most major markets. Investors targeting cash flow now look for 1%+ in tier-2/3 markets; appreciation-focused investors accept 0.6–0.8% in higher-quality markets and bet on price growth instead.
The 2% rule (monthly rent ≥ 2% of price) was a BRRRR-era benchmark for cash-flow-monster properties in distressed neighborhoods. It still exists in markets like Cleveland C-class neighborhoods or rural Indiana, but the trade-off is tenant quality, eviction risk, and management overhead. Not a strategy for first-time investors. The 1% rule is the right starting filter; 2% is a specialist play.
No — it's a top-line filter on gross rent vs. price only. That's why it's a "rule of thumb" and not a full underwriting tool. The whole point is speed: you can apply it from a phone in 5 seconds while scrolling Zillow. Once a property passes the 1% filter, run the full cap rate + cash-on-cash + DSCR stack to see if it actually cash flows.
The 1% rule is gross-rent-based. The 50% rule (op-ex = 50% of gross rent) and the 70% rule (max purchase price = 70% of ARV − rehab, for BRRRR) target different decisions. Use 1% to filter listings, 50% to estimate NOI quickly, and 70% if you're doing a value-add play. They're complementary, not competing.