One Percent Rule

People learning about investment may come across different real estate investment terms. The one percent rule is a guideline to assess the value and potential profitability of a certain piece of property.

  This rule is simple. Following the one percent rule would mean the gross monthly rent should be at least one percent of its final price. For example:

  • $150,000 property / $1,500 monthly rent = 100 months
  • $200,000 property / $2,000 monthly rent = 100 months
  • $300,000 property / $3,000 monthly rent = 100 months
  • $400,000 property / $4,000 monthly rent = 100 months

If you are an investor this would be a quick and easy way to eliminate poor investment opportunities.
Of course it helps to have information on comparable properties to help with estimating monthly rent.


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