1 Percent Rule Calculator

✖Purchase Price is the amount of money paid to acquire an asset, property, or goods, typically agreed upon between the buyer and seller in a transaction.ⓘ Purchase Price [PP]

+10%

-10%

✖Minimum Monthly Rent refers to the lowest amount of money a tenant must pay each month to occupy a property under the terms of a lease agreement.ⓘ 1 Percent Rule [MMR]

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Formula

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1 Percent Rule

Formula

`"MMR" = 0.01*"PP"`

Example

`"1790"=0.01*"179000"`

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1 Percent Rule Solution

STEP 0: Pre-Calculation Summary

Formula Used

Minimum Monthly Rent = 0.01*Purchase Price
MMR = 0.01*PP
This formula uses 2 Variables

Variables Used

Minimum Monthly Rent - Minimum Monthly Rent refers to the lowest amount of money a tenant must pay each month to occupy a property under the terms of a lease agreement.
Purchase Price - Purchase Price is the amount of money paid to acquire an asset, property, or goods, typically agreed upon between the buyer and seller in a transaction.

STEP 1: Convert Input(s) to Base Unit

Purchase Price: 179000 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

MMR = 0.01*PP --> 0.01*179000

Evaluating ... ...

MMR = 1790

STEP 3: Convert Result to Output's Unit

1790 --> No Conversion Required

FINAL ANSWER

1790 <-- Minimum Monthly Rent

(Calculation completed in 00.004 seconds)

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Credits

Created by Keerthika Bathula

Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

Keerthika Bathula has created this Calculator and 50+ more calculators!

Verified by Aashna

IGNOU (IGNOU), India

Aashna has verified this Calculator and 25+ more calculators!

< 20 Mortgage and Real Estate Calculators

Long Term Capital Gain

Go Long Term Capital Gain = Final Sale Price-Indexed Cost of Acquisition-Indexed Cost of Improvement-Cost of Transfer

Short Term Capital Gain

Go Short Term Capital Gain = Final Sale Price-Cost of Acquisition-Home Improvement Cost-Cost of Transfer

Effective Gross Income

Go Effective Gross Income = Potential Gross Rental Income+Other Income-Allowances for Vacancies and Bad Debts

Net Rental Yield

Go Net Rental Yield = ((Annual Rental Income-Annual Expenses)*(1/Property Value))*100

Cost Approach Appraisal

Go Property Value = Reproduction Cost-Depreciation+Value of Land

Gross Potential Rent

Go Gross Potential Rent = Number of Units Available for Rent*Annualised Market Rent

Qualifying Ratio

Go Debt to Income Ratio = (Total Monthly Debt Payments/Gross Monthly Income)*100

Vacancy Rate

Go Vacancy Rate = (Vacant Units in the Building*100)/Total Units in the Building

Equity Build up Rate

Go Equity Build Up Rate = Year One Equity Build Up/Year Capital Expenses

Gross Income Multiplier

Go Gross Income Multiplier = Property Sale Price/Effective Gross Income

Gross Rental Income

Go Potential Gross Rental Income = Property Value/Gross Rent Multiplier

Cash on Cash Return

Go Cash on Cash Return = (Net Operating Income/Total Cash Invested)*100

Net Operating Income

Go Net Operating Income = Total Property Revenue-Operating Expenses

Gross Rental Yield

Go Gross Rental Yield = (Annual Rental Income/Property Value)*100

Down-Payment Amount

Go Down Payment Amount = Final Sale Price*Percentage Payment

Rent to Cost Ratio

Go Rent to Cost Ratio = Monthly Rental Income/Property Value

Assessed Value

Go Assessed Value = Assessment Market*Market Value

Property Tax Rate

Go Property Tax Rate = Assessed Value*Mill Rate

Annual Rental Income

Go Annual Rental Income = Monthly Rental Income*12

1 Percent Rule

Go Minimum Monthly Rent = 0.01*Purchase Price

1 Percent Rule Formula

Minimum Monthly Rent = 0.01*Purchase Price
MMR = 0.01*PP

What is 1 Percent Rule ?

The 1 percent rule in real estate investing is a guideline stating that a property's monthly rental income should ideally be at least 1 percent of its total purchase price. This rule helps investors quickly assess the income potential of a property relative to its cost, with properties meeting or exceeding this benchmark often considered more favorable for generating positive cash flow and a satisfactory return on investment. However, while the 1 percent rule provides a straightforward assessment, investors should also consider other factors such as property location, expenses, market conditions, and their investment objectives before making investment decisions.

How to Calculate 1 Percent Rule?

1 Percent Rule calculator uses Minimum Monthly Rent = 0.01*Purchase Price to calculate the Minimum Monthly Rent, The 1 Percent Rule is a guideline in real estate investing suggesting that a property's monthly rental income should be at least 1 percent of its total purchase price. Minimum Monthly Rent is denoted by MMR symbol.

How to calculate 1 Percent Rule using this online calculator? To use this online calculator for 1 Percent Rule, enter Purchase Price (PP) and hit the calculate button. Here is how the 1 Percent Rule calculation can be explained with given input values -> 1790 = 0.01*179000.

FAQ

What is 1 Percent Rule?

The 1 Percent Rule is a guideline in real estate investing suggesting that a property's monthly rental income should be at least 1 percent of its total purchase price and is represented as MMR = 0.01*PP or Minimum Monthly Rent = 0.01*Purchase Price. Purchase Price is the amount of money paid to acquire an asset, property, or goods, typically agreed upon between the buyer and seller in a transaction.

How to calculate 1 Percent Rule?

The 1 Percent Rule is a guideline in real estate investing suggesting that a property's monthly rental income should be at least 1 percent of its total purchase price is calculated using Minimum Monthly Rent = 0.01*Purchase Price. To calculate 1 Percent Rule, you need Purchase Price (PP). With our tool, you need to enter the respective value for Purchase Price and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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