What this measures
People use the 1% rule as a first look: monthly rent at or above 1% of the price. Expenses, vacancy, taxes, insurance, and the loan are all missing from that look.
This page shows the ratio of the rent and price you type, and the monthly rent that would equal exactly 1% of that price. Passing or missing 1% is not a buy decision.
Formula
Rent-to-price = monthly rent ÷ purchase price. Rent for a 1% ratio = purchase price × 0.01.
If the price is zero or blank, the ratio is undefined. The 1% rent figure is still the price times one percent, which is zero when the price is zero.
Example
Example
The sample price and rent below are a check of the ratio and of the 1% rent. Rent-to-price is 0.90%. Rent for 1% is $2,000. Monthly rent is $1,800.
Example. These inputs are numbers you can replace. They are not a property RE Underwrite Lab bought, sold, listed, or inspected.
Questions
Does meeting the 1% rule mean the property cash flows?
No. The rule ignores expenses and debt. A deal can meet 1% and still lose cash, or miss 1% and still cash flow.
Is 1% a recommendation?
No. It is a ratio people talk about. This page calculates it. It does not tell you to accept or reject a house.
Should rent be the asking rent or the rent after vacancy?
Type the monthly rent you want in the ratio. The page does not subtract vacancy.
How is this different from cap rate?
Cap rate uses annual NOI and price. The 1% rule uses monthly rent and price, with no expenses removed.
Where do I test a full rental?
The long-term rental calculator uses rent, vacancy, expenses, and a loan. This page does not.