The 1% Rule in Real Estate

The 1% rule is the fastest gut-check in rental investing: a property's monthly rent should be at least 1% of its purchase price. It's a screening filter, not a final answer — but it kills obvious losers in two seconds.

How it works

A $200,000 home should rent for at least $2,000/month to pass. A $400,000 home needs ~$4,000/month. If it doesn't clear 1%, it'll be tough to cash-flow with a mortgage on top of it.

When the 1% rule breaks

• Hot appreciation markets (coastal metros) rarely hit 1% — investors there bet on growth, not cash flow.
• High-property-tax states can pass 1% and still bleed cash, because taxes eat the margin.
• Cheap markets can exceed 2% but carry higher vacancy and management risk.

So treat 1% as a first filter, then verify with real numbers.

What to check after the 1% rule

If a property passes, run the real math: cap rate, cash-on-cash return, and monthly cash flow. The 1% rule gets you to "worth a closer look" — these numbers tell you whether to actually buy.

Screen deals instantly

PropVision runs the 1% check and the full deal math on any address in seconds, so you can filter a whole list fast.