What is 1% Rule Calculator (Plus 50%, 70%, and 2% Rules)?
A 1% Rule Calculator (Plus 50%, 70%, and 2% Rules) computes 1% rule calculator (plus 50%, 70%, and 2% rules) from the inputs you provide. It applies the standard formula to the values you enter and returns the result instantly, without sending any data to a server. Also computes 50% rule, 70% rule (flips), and 2% rule (high-yield).
1% Rule Calculator (Plus 50%, 70%, and 2% Rules)
Quickly screen a rental property against the 1%, 2%, 50%, and 70% rules of thumb. Pass / fail verdict in seconds.
TLDR
The 1% rule says monthly rent should be at least 1% of total all-in cost (purchase + rehab + closing). If the property fails this test, it almost certainly will not cash flow with leverage. The 50% rule estimates operating expenses as half the rent. The 70% rule (for flips) caps your max bid at 70% of ARV minus rehab.
How to use this calculator
- Enter your inputs. Each field is labeled with its unit (dollars, percent, hash rate, etc.).
- Read the result instantly. Numbers update live as you type; no submit button.
- Stress-test by changing one input. Drop the rent 10%, raise the rate 1%, or shave the ARV. Watch what flips the verdict.
- Cross-check the formula below. Calculator math is open and matches the published formula exactly.
- Copy or screenshot for later. The site stores nothing; close the tab and inputs are gone.
About this tool + formula
Open math. The calculator runs entirely in your browser using the formula below. Nothing is sent to a server, nothing is logged, no signup required.
one_percent = (monthly_rent / total_all_in) * 100 # >= 1.0 to pass two_percent = same metric checked against 2.0 (high-yield) fifty_percent_NOI = monthly_rent * 0.50 # operating cash flow estimate seventy_percent_max = (ARV * 0.70) - rehab # max bid for fix-and-flip
Real-world scenarios where this calculator helps
First filter on MLS listings
Skim 50 listings in 10 minutes. Anything below 0.7% on the 1% rule is an instant skip. Drill into the rest.
New investor sanity check
Before paying for a full deal analysis, run the rules of thumb. They eliminate 80% of bad deals in 30 seconds.
Wholesaler offer triage
Wholesaler sends 'great deal' over text. Type the numbers in. If the 1% rule fails by a wide margin, ignore. If it passes, deeper analysis.
Fix-and-flip max-bid setter
Use the 70% rule to set your absolute ceiling at auction or in negotiation. Going above means your profit margin is gone.
What this tool does
- Computes the 1% ratio (monthly rent / total all-in cost).
- Compares against both 1% (standard) and 2% (high-yield) thresholds.
- Estimates monthly NOI using the 50% rule.
- Computes the 70% rule maximum purchase price for flips.
- Issues a strategy-specific verdict (rental, flip, BRRRR, high-yield).
What it does NOT handle
- Doesn't include the mortgage payment or financing terms (use the BRRRR or rental cash flow calculator for that).
- Doesn't validate the rent estimate (always cross-check with local PM and rent comps).
- Doesn't include depreciation, tax benefits, or appreciation assumptions.
- Doesn't model location-specific factors (school district, crime, neighborhood trajectory).
- Doesn't replace a full pro forma. These are screening rules, not buying decisions.
Common mistakes and pitfalls
- Forgetting closing costs and rehab in 'total cost'. The 1% rule uses ALL-IN cost, not just purchase.
- Using rosy rent estimates from listing sites. Use the achievable rent your property manager confirms.
- Treating the 1% rule as a sufficient filter. Passing the 1% rule means worth analyzing - it does not mean the deal is good.
- Applying the 1% rule to coastal cities or appreciation-focused markets. Almost no SF / NYC / LA property hits 1%; investors there bet on appreciation, not cash flow.
- Using the 2% rule outside very specific markets. 2% rule deals exist in low-cost Midwest and Sun Belt cities; in most metros it is unrealistic.
Frequently asked questions
What is the 1% rule in real estate?
A quick screen: monthly rent should equal at least 1% of the total purchase + rehab + closing costs. A $200,000 all-in property should rent for at least $2,000 / month.
Is the 1% rule outdated?
The threshold itself (1%) was set in a low-rate environment. With today's rates, even 1% deals are tight. Many investors now look for 1.2-1.5%. The math idea is still useful even if the bar is moving up.
What is the 50% rule?
Approximation: operating expenses (taxes, insurance, vacancy, maintenance, mgmt, capex) average about 50% of gross rent over time. So NOI = rent * 0.50. Add mortgage P&I to estimate cash flow.
What is the 70% rule for flipping?
Max bid = 0.70 * ARV minus estimated rehab. The 30% gap covers your profit, holding costs, closing on both sides, and a buffer for surprises.
What is the 2% rule?
Same calculation as the 1% rule but with a 2% threshold. Real in some Midwest blue-collar markets (Detroit, Cleveland, Memphis); essentially unobtainable in most major metros.
Should I buy a property that fails the 1% rule?
Sometimes. Appreciation-focused investors often accept negative cash flow for 5-10 years if the area is gentrifying. House hackers using FHA loans may also accept lower ratios. But the default answer is no.
How does this differ from cap rate?
Cap rate is NOI / property value (assumes no mortgage). The 1% rule uses gross rent / total cost. Cap rate is more rigorous; 1% rule is a 30-second screen.
Where does the 50% number come from?
Empirical observation across thousands of small multifamily and single-family rentals over decades. Higher in some markets (high-tax areas like NJ / IL push it to 55-60%); lower in others (low-tax + low-insurance markets like TX rural areas can be 40-45%).
Are these rules legally enforceable?
No. They are investor rules of thumb, not laws. Lenders use DSCR (Debt Service Coverage Ratio) and DTI - those are the hard rules.
Do these rules work for commercial real estate?
No. Commercial uses cap rate, NOI, and tenant credit analysis. The 1%, 2%, 50%, 70% rules are residential SFR and small-multifamily heuristics.