The Quickest Way to Spot a Deal
The 1% Rule is simple: A property's monthly rent should be at least 1% of its purchase price. That's it.
Why 1%?
Over decades of real estate investing, this ratio has proven to be a reliable threshold. If a property meets the 1% rule, the rent is usually high enough to cover the mortgage, taxes, insurance, and maintenance, while still leaving profit for the investor.
Example Calculation
House Price: $150,000
Required Rent:
$1,500/month
If this house rents for only $1,100, it likely won't cash flow well unless you put a huge down payment on it.
Is the 1% Rule Dead?
In today's high-interest, high-cost market, finding 1% deals is harder, but not impossible. You often have to look in the Midwest or Southeast. In expensive markets like San Francisco or Seattle, you might never find a 1% deal, and that's okay—investors there are banking on appreciation, not cash flow.