What Is 1% Rule?
The 1% rule is a quick rental-investing screening test: a property's monthly rent should be at least 1% of its purchase price for the deal to be worth a closer look.
Formula
Monthly Rent ÷ Purchase Price ≥ 1%
Example
A $250,000 property would need to rent for at least $2,500 per month to pass the 1% rule.
Why It Matters
It's a fast first filter, not a substitute for a full cash flow analysis — many solid deals in expensive markets don't hit 1%, and passing it doesn't guarantee positive cash flow once real expenses are counted.