Type in price and rent. Find out if the deal passes the 1% rule, the 2% rule and what the gross rent multiplier looks like.
A screening ratio, not a full underwrite.
The 1% rule is a screening convention, not a guarantee, that says monthly rent should equal at least 1% of the purchase price: on a $250,000 property, that is a $2,500 target rent, this site's own formula. The calculator above expresses your actual monthly rent as a percentage of purchase price, shows the target rents for both the 1% and the stricter 2% rule, and computes the gross rent multiplier, price divided by annual rent, so you have several ways to read the same deal. Pass or fail, this is a sixty-second triage step, not a final verdict, before you run full underwriting.
The 1% rule only checks rent against price. Vacancy, taxes and management still decide whether a deal actually works.
The 1% rule says monthly rent should be at least 1 percent of the purchase price: a quick filter before running full numbers. On a $250,000 property, the threshold is $2,500 per month. Most mid-size U.S. markets today land somewhere between 0.7 and 1.0 percent. The 2% rule is rare outside of a small subset of high-yield markets, and where it appears, it usually reflects meaningful property risk alongside the strong cash-flow potential.
The 1% rule is triage, not a buy signal. High-appreciation markets fail it routinely and still produce solid long-term returns. It tells you which deals are worth running through the full calculator, not which ones to buy. The gross rent multiplier, price divided by annual rent, frames the same comparison differently: a lower GRM means less price paid for every dollar of annual rent collected.
This calculator loads with a $250,000 price and $2,200 rent, an 0.88% ratio. Holding price fixed, here is the rent and gross rent multiplier at a few other ratios along the same scale.
| Rent / price ratio | Monthly rent needed | GRM |
|---|---|---|
| 0.7% | $1,750 | 11.9 |
| 0.8% | $2,000 | 10.4 |
| 0.88% (this calculator's default) | $2,200 | 9.5 |
| 1.0% | $2,500 | 8.3 |
| 1.2% | $3,000 | 6.9 |
GRM falls as the ratio climbs, since you are paying less for every dollar of annual rent. Neither column tells you what the property will actually net after expenses, which is why this stays a screen and not a verdict.
Monthly rent should equal at least 1 percent of the purchase price. It is a quick screen, not an underwriting standard.
In most high-cost or appreciating markets today, clearing 1 percent is genuinely difficult. Treat it as an initial filter rather than a hard requirement.
Price divided by annual rent. A lower GRM means you are paying less per dollar of annual rent, which generally points to better cash-flow potential.
No. It is a screening estimate based on two inputs. Use the full rental property calculator to underwrite before making any offer.