The One Percent Rule of Real Estate: Easy Math to Evaluate Rental Properties

So you’re interested in investing in real estate rental properties. Congratulations! But the learning curve to evaluating and purchasing your first house is STEEP.

The one percent rule is here to help you do the easy math on rental properties.

In order to generate positive cash flow, the monthly rent of a property should be at least 1% of the all-in purchase price.

What is the 1% Rule for Real Estate Investing?

The 50% rule states that on average, the expenses for a rental property will be about 50% of the rent.

The 50% Rule for Rental Property Expense

One of the best advantages of real estate is the ability to leverage your money by taking out a mortgage.

Adding the Mortgage to the Equation

Once you know how to run the numbers – you have the power to put together a deal that works for you.

What percent should I make on a rental property?

Rules of thumb are just that, a back-of-the-envelope calculation you can do in your head to figure out if a deal is worth looking at further.

The One Percent Rule is Just the Beginning

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