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.
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 — debt service for 50% rule cash flow (tax/ins already in the 50%)
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 debt service (P&I)
- ($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.
Need DSCR in Canada? LendCity originates investor DSCR for Canadian properties.
Prefer to talk live?
Book a free 30-minute strategy call with a DSCR advisor.
- No hard sell — just guidance
- Matched to licensed US lenders
- Phone or Microsoft Teams
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