BuyBoxBuyBox
Get early access, free
← Help center
Strategy

The 1% rule: a 10-second screen, not an underwrite

Updated 2026-08-26

The 1% rule is the fastest filter in real estate investing: a rental property is worth a closer look if its monthly rent is at least 1% of what you pay to acquire it (purchase price plus any upfront rehab). A $200,000 house that needs $10,000 of work should rent for about $2,100/mo to pass.

Monthly Rent ÷ (Purchase Price + Upfront Rehab) ≥ 1%
It's a screening ratio, not a return. Passing the 1% rule doesn't mean a deal makes money. It means it's worth running the real numbers.

Try it

Purchase price
Upfront rehab
Monthly rent
Rent-to-cost
,
Rent needed to pass
,

How to read it

≥ 1%
Screen it in
0.8 to 1%
Maybe: run the numbers
< 0.8%
Needs a reason

Those bands are looser than the name suggests, on purpose. In many 2026 metros almost nothing clears a strict 1%, and some deals below it still work on other math (low taxes, high appreciation, a value-add refinance). The rule sorts your list; it doesn't make the decision.

Where the 1% rule breaks

  • It ignores expenses entirely. Two properties at 1.1% can have wildly different tax bills, insurance costs, and repair loads. Rent-to-price says nothing about what you keep. That's what the 50% rule and a real expense line-up are for.
  • It ignores financing. The rule dates from eras of very different interest rates. At today's rates, a passing deal can still be cash-flow negative once the mortgage hits, check DSCR.
  • It punishes expensive markets blindly. Strong metros rarely pass; shrinking towns often do. A rule that always points you at the cheapest markets isn't a strategy.
  • Rehab and ARV distort it. For a BRRRR deal, rent against the all-in cost and against the after-repair value tell two different stories: a screen can't hold both.

Rule of thumb → shortlist. Real underwrite → decision.

From screen to underwrite

The honest use of the 1% rule is triage: pass/fail a page of listings in a minute, then actually underwrite the survivors. That second step is what BuyBox is for: a Quick Analysis takes about 30 seconds per deal and returns real cash flow, cash-on-cash, cap rate, and DSCR, with the math behind every number a hover away. Your first 7 days are a free trial: 3 Deep Dives and 10 Quick Analyses, no card required.