Underwrite
1 percent rule calculator for rental property
The 1% rule is a blunt filter, not a full underwrite: monthly rent should be about 1% of the purchase price (or your all-in cost). Pass means “worth a deeper look,” not “buy it.” Fail means run the numbers anyway if strategy differs — but know you’re fighting the math.
Assumptions
Returns stack
- Rent / price
- —
- Rent needed for 1%
- —
When to use
Triaging dozens of listings, talking a shiny-object purchase off the ledge, or teaching a new investor a first screen.
When not to
Don’t buy on a 1% pass alone — ugly expenses can still lose money. High-cost coastal markets often fail 1% and still trade.
Assumptions: Default denominator is purchase price; you can use all-in cost (price + rehab) for consistency.
Worked examples
Input
Price $250,000 Rent $2,500 / mo
Output
1.00% — passes
Worth a deeper underwrite, not an automatic buy.
Input
Price $250,000 Rent $1,900 / mo
Output
0.76% — fails screen
You can still run cash flow if strategy differs — just know the filter failed.
Common traps
- High-cost coastal markets often fail 1% and still trade — use local judgment.
- Passing 1% with ugly expenses can still lose money — always run cash flow next.
- Gross rent is not collected rent.