One Percent Rule

Does monthly rent equal or exceed 1% of purchase price?

Example Result

Sample Data

0.74%

Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.

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One Percent Rule Formula

Monthly Rent / Purchase Price >= 1%

$2,850 / $385,000 >= 1%

0.74%

What This Means

A sample property priced at $385,000 with $2,850/month rent has a one percent rule of 0.74%. The 1% rule is the fastest deal screening tool. You can evaluate a potential purchase in seconds without a calculator. While not definitive, properties that pass the 1% rule are worth deeper analysis.

Where This Value Comes From

One Percent Rule is not entered directly — it is calculated from Monthly Rent and Purchase Price. See the formula breakdown above and the detailed inputs below.

Calculated From

One Percent Rule is calculated using these inputs:

Monthly Rent

The gross monthly rental income collected from tenants.

Found on your lease agreement

$2,850

Purchase Price

The agreed-upon price to acquire the property.

Found on your purchase contract / hud-1

$385,000

Why It Matters

The 1% rule is the fastest deal screening tool. You can evaluate a potential purchase in seconds without a calculator. While not definitive, properties that pass the 1% rule are worth deeper analysis.

Detailed Explanation

The One Percent Rule is a quick screening test: if monthly rent is at least 1% of the purchase price, the property is likely to cash flow positively. This is a rule of thumb, not a guarantee.

Discussion

Currently displayed as True/False, but showing the actual percentage (e.g. 0.74%) would be more useful than a simple pass/fail. Investors could see how close they are to meeting the rule, rather than just whether they pass or not.