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.