Free deal screener
1% & 50% Rule Screener
Quickly screen rental properties with the 1% and 50% rules — then go deeper with DSCR, cap rate, and cash-on-cash analysis.
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Screener only — not a substitute for full analysis. The 1% and 50% rules are quick filters used to eliminate deals, not to approve them. Always follow with a full DSCR, NOI, and cash-on-cash calculation before making an offer.
Deal screener
1% & 50% rule
Optional — see where you stand
Optional — for 50% rule cash flow
Screener results
1% rule: rent needed
Close — within 20% of target
Your rent: $1,850 (93% of target)
- 50% rule estimate
- Gross annual rent
- $22,200
- Estimated expenses (50%)
- ($11,100)
- NOI estimate
- $11,100
- Less annual PITIA
- ($13,800)
- Est. annual cash flow
- -$2,700
- Est. monthly cash flow
- -$225
To pass 1% rule at $1,850/mo rent
Max purchase price: $185,000 — that's $15,000 less than asking.
1% rule: monthly rent ≥ 1% of purchase price ($200K → need $2,000/mo). 50% rule: assume ~50% of gross rent goes to operating expenses (excluding mortgage). These are filters — real properties require full underwriting.
If the deal passes the screen — go deeper
- DSCR Calculator — compute exact debt service coverage using real P&I, tax, insurance, and HOA
- Cap Rate & NOI Calculator — full expense breakdown, not just 50%
- Cash-on-Cash Calculator — measure the levered return on your actual cash invested
Deal passes the screen?
Get matched with DSCR lenders — top 3 offers in one hour. No credit pull.
What is the 1% rule?
The 1% rule is a quick mental math filter for rental property investing: a property's monthly gross rent should be at least 1% of the purchase price for it to be worth deeper analysis.
1% Rule: Monthly Rent ≥ Purchase Price × 1%
A $180,000 property needs $1,800/month rent. A $250,000 property needs $2,500/month. If the rent is well below these thresholds, the deal is unlikely to generate positive cash flow after accounting for a mortgage payment and operating expenses — in most markets, at most rate environments.
The 1% rule is a screener — not an approval. It eliminates obviously bad deals in 10 seconds. Deals that pass still require full underwriting.
What is the 50% rule?
The 50% rule is a companion heuristic: assume roughly 50% of gross rent will be consumed by operating expenses (not including mortgage). These expenses include:
- Property taxes
- Insurance (hazard + flood if applicable)
- Property management (8–10% of rent)
- Maintenance and repairs (5–8%)
- CapEx reserves (5–8%)
- Vacancy loss (5–8%)
On a $2,000/month gross rent property, the 50% rule estimates $1,000/month in operating expenses. The remaining $1,000 must cover your mortgage payment. If mortgage + PITIA is $950/month, the deal cash flows $50/month — barely breakeven.
50% is a rough average. Newer properties in low-tax, low-insurance markets might run 35–40%. Older properties in high-tax states with high maintenance might run 55–65%. The rule is for quick screening; don't use it as your actual underwriting model.
Why these rules are not substitutes for full analysis
The 1% and 50% rules were popularized in an era of lower purchase prices and higher rental yields. In 2026, with purchase prices at elevated levels in many markets, the 1% rule eliminates a lot of otherwise fine deals — and occasionally lets through risky ones in bad markets with artificially high rents.
Here are four scenarios where the rules mislead:
- High-tax markets: A $200,000 property in New Jersey with $800/month in property taxes already consumes 40% of the 50% "budget" before any other expense. The 50% rule understates your actual operating costs here.
- New construction: CapEx on a new build in year 1 is nearly zero. A 5% CapEx assumption overstates expenses. 50% rule will understate your actual near-term cash flow.
- High-vacancy tertiary markets: A property might pass the 1% rule at a 20% vacancy rate — meaning the "1% rent" is only achievable 80% of the time. Net effective rent might be far below 1%.
- STR vs LTR: A property might fail the 1% rule on long-term rent but generate 2%+ as an Airbnb. The 1% rule was designed for traditional long-term rentals.
From screening to DSCR underwriting
Once a deal passes the 1% screen, the next steps move from rough estimates to real numbers:
| Tool | What it tells you | When to use |
|---|---|---|
| 1% Rule (this calculator) | Worth looking further? | Initial screening, 5 seconds |
| Cap Rate / NOI | Unlevered yield | Property-level comparison |
| DSCR Calculator | Will a lender fund this? | Before making an offer |
| Cash-on-Cash | What do I earn on my cash? | Final go/no-go decision |
| Max Loan Calculator | What loan can this property support? | Offer price negotiation |
Where does the 1% rule still work?
In 2026, finding 1% deals requires targeting specific market types:
- Midwest secondary markets: Cleveland, Columbus, Dayton, Cincinnati, Indianapolis, Kansas City, St. Louis — properties priced $100K–$180K that rent for $1,000–$1,800/mo
- Southern tertiary markets: Birmingham, Jackson, Huntsville, smaller cities in Tennessee, Arkansas — lower prices, reasonable rents
- Value-add / distressed: Any market where you're buying significantly below market and rehabbing to increase rent (BRRRR strategy)
- Manufactured housing: Land/home packages or park-owned homes can hit 1%+ in rural and suburban markets
Continue to full analysis
- DSCR Calculator — compute exact debt service coverage with real PITIA
- Cap Rate & NOI Calculator — full expense waterfall, not just 50%
- Cash-on-Cash Calculator — levered return on your actual cash invested
- Max Loan Calculator — find the purchase price where the numbers work
Frequently asked questions
What is the 1% rule for rental properties?
The 1% rule is a quick deal-screening heuristic: monthly gross rent should equal at least 1% of the purchase price. A $200,000 property should rent for at least $2,000/month. If rent is significantly below 1%, the deal likely won't cash flow after expenses and debt service in most markets. It's a filter to eliminate obviously bad deals quickly — not a substitute for full underwriting.
Is the 1% rule still relevant today?
As a rough filter, yes — but it's much harder to achieve in many markets than it was 15 years ago. In 2010, the 1% rule was achievable in most secondary markets. In 2024–2026, with higher purchase prices and (in many markets) rents not keeping pace, finding 1% deals requires searching in specific tertiary markets, buying distressed properties below market value, or using short-term rental strategies. In coastal or gateway markets, you'll almost never see 1% deals.
What is the 50% rule?
The 50% rule estimates that operating expenses (excluding mortgage) consume approximately 50% of gross rent. On a property renting for $2,000/month, budget $1,000/month for taxes, insurance, management, maintenance, CapEx, and vacancy. The remaining $1,000/month must cover your mortgage payment for the deal to break even. It's a rough estimate — actual expenses vary significantly by property age, location, and management style.
Why does my deal fail the 1% rule but still pencil out as DSCR?
Because DSCR uses gross rent (not net) and compares it only to PITIA (not all expenses). A $1,800/month rent on a $200,000 property fails the 1% rule ($2,000 needed), but if PITIA is $1,600/month, the DSCR is 1.125 — perfectly fundable. The 1% rule is more conservative than DSCR because it implicitly accounts for operating expenses. A deal can DSCR qualify at 1.0 and still lose money after expenses.
Should I skip full analysis if a deal passes the 1% rule?
Absolutely not. The 1% rule is a screening tool, not an approval. A deal that passes 1% still needs a full DSCR calculation, cap rate analysis, cash-on-cash projection, and market rent validation. Some deals pass 1% in terrible markets with terrible properties — high gross rent doesn't mean good returns if vacancy is 20%, management costs are high, and CapEx is looming.
What markets still meet the 1% rule?
Tertiary and secondary markets in the Midwest, South, and parts of the Southeast — places like Detroit, Cleveland, Memphis, Birmingham, Dayton, Akron, and smaller cities in Ohio, Indiana, and Michigan. These markets have lower purchase prices relative to rent. Distressed or value-add properties in any market can meet the 1% rule after rehab (as part of a BRRRR strategy). Purpose-built workforce housing and manufactured housing communities often exceed 1% as well.
Does the 50% rule apply to short-term rentals?
No — STR expense structures are very different. STR operating expenses often run 40–60% of gross revenue, but the categories are different (cleaning fees, platform fees, furnishings, higher utilities) and STR gross revenue is often much higher per night. Use STR-specific underwriting tools — AirDNA data and the STR DSCR Calculator — rather than the residential 50% rule.
What's the relationship between the 1% rule and DSCR?
Both are ways to quickly assess whether a property can cover its costs. The 1% rule is simpler but more conservative — it doesn't require knowing the mortgage payment. DSCR is the official lender metric and uses gross rent divided by PITIA. In practice, a property that meets the 1% rule in most markets will have a DSCR above 1.0 at 75–80% LTV financing. A property that fails the 1% rule may still DSCR qualify if rates are low and purchase price is close to the 1% threshold.