What the 1% rule is
The 1% rule is a quick screen: a rental's monthly rent should be at least 1% of the total purchase price, including rehab. It's a rough filter for whether a deal is worth underwriting further — not a guarantee of cash flow.
The math is rent ÷ price × 100. If that's 1% or higher, it clears the rule.
Worked example
A property costs $250,000 all-in and rents for $2,000/month. That's $2,000 ÷ $250,000 × 100 = 0.8% — below the line. To clear 1%, rent would need to be $2,500. The calculator shows that target rent for you.
Use it as a filter, not a verdict
The 1% rule ignores taxes, insurance, vacancy, and rates, so it fails in high-cost, low- yield markets where good deals still exist. Treat it as a first cut, then run cap rate and GRM on the survivors.
The rule hinges on the rent figure — pull a free rent estimate for the address before trusting it.