Rent to Value Ratio

Monthly rent as a percentage 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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Rent to Value Ratio Formula

Monthly Rent / Purchase Price x 100

$2,850 / $385,000 x 100

0.74%

What This Means

A sample property priced at $385,000 with $2,850/month rent has a rent to value ratio of 0.74%. The 1% rule is one of the most widely used quick screens in rental investing. Properties at or above 1% tend to cash flow well, while those below 0.7% often struggle to cover expenses. This ratio lets you instantly compare deals across different price points and markets.

Where This Value Comes From

Rent to Value Ratio 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

Rent to Value Ratio 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

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Why It Matters

The 1% rule is one of the most widely used quick screens in rental investing. Properties at or above 1% tend to cash flow well, while those below 0.7% often struggle to cover expenses. This ratio lets you instantly compare deals across different price points and markets.

Detailed Explanation

The Rent to Value Ratio compares monthly rent to the purchase price of the property. This is the continuous version of the 1% rule—a property that rents for 1% of its purchase price each month meets the classic investor benchmark. Higher ratios indicate stronger cash flow potential relative to capital invested.