REDOSFree 1% Rule Calculator
Rent divided by price — the 10-second screen investors use before they underwrite anything. Plus the rent this property actually needs. Free. No login.
This tells you what rent the property needs. Check the number against real listings in the area before you rely on it — we do not have your local market rents.
The 1% rule wants $2,200/mo at this price.
Pass — this loses money as structured.
Cash-on-cash -8.1% — weak for a rental.
What rent this property needs
You don't just need the numbers. You need to know what to fix.
Free calculators hand you a spreadsheet. REDOS reads your deal and tells you exactly where it's weak — and how to save it.
You'd feed this deal $386/mo. Raise rents to market, cut operating costs, or lower the price before you buy.
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What the 1% rule is for
The 1% rule says a rental should collect at least 1% of its purchase price in monthly rent — a $200,000 house should rent for $2,000. It is not a valuation method and it was never meant to be one. It is a filter: a way to look at forty listings and decide which three deserve a real underwriting session.
- 1
Divide rent by price
Monthly rent ÷ purchase price. 1% or better passes the screen.
- 2
Check the break-even rent
The rent at which cash flow is exactly zero, once the mortgage and operating costs are paid.
- 3
Compare the two
If break-even rent is above market rent for the area, the deal loses money every month no matter what the 1% rule says.
- 4
Then underwrite properly
The rule ignores taxes, insurance, condition and rate. Passing it is permission to look closer, not a green light.
Be honest about the rule's age: it comes from an era of much cheaper money, and in most US markets today very few properties clear it. That does not make it useless — it makes it a relative filter. If nothing in your market hits 1%, rank by what does best and rely on the break-even rent and DSCR to tell you whether the deal actually works.
Frequently asked questions
What is the 1% rule in real estate?
A screening shortcut: monthly rent should be at least 1% of the purchase price. A $250,000 property would need $2,500 a month. It is a fast filter for comparing listings, not a way to value a property.
Is the 1% rule still realistic?
In many US markets, rarely. It dates from a period of much lower prices relative to rents. Treat it as a relative ranking tool — find the best rent-to-value available in your market — and let break-even rent, cap rate and DSCR decide whether the deal works.
What is a good rent-to-value ratio?
1% is the classic benchmark and 0.7% or better is workable in many markets today, especially where appreciation is strong. Below about 0.5% the property is very unlikely to cash flow with a mortgage on it.
What is break-even rent?
The monthly rent at which the property exactly covers its mortgage, taxes, insurance and other operating costs — cash flow of zero. Below it you pay out of pocket every month. Check it against real listings nearby before you buy.
Does this tell me what rent to charge?
No, and it deliberately does not pretend to. It tells you what rent the property NEEDS to work financially. What it can actually achieve depends on your local market — check the number against comparable listings on a rental site before relying on it.