The short answer
The 1% rule is a rough screening convention comparing monthly rent with purchase price. It is not a valuation method, lending standard or guarantee of positive cash flow.
On this page
State the chosen convention
Some users compare with price alone and others include initial repairs. Make that denominator explicit. Use actual support for the rent estimate rather than increasing it to meet the rule.
Underwrite the property fully
Include vacancy, operating costs, financing and major work. Different tax, insurance and repair burdens can make properties with the same ratio perform very differently.
Worked example
A $200,000 property with $2,000 monthly rent meets the price-only 1% arithmetic. That says nothing about whether high insurance, deferred maintenance and debt payments leave sustainable cash flow.
References and next steps
Use these references for the specific topic they cover. Local requirements and individual circumstances may differ.
Written and maintained by the Rentari team. Examples explain a decision; they are not customer results. Found an error or an unclear step? Send a correction with this page's address and the detail to review.
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