How this number is made
The one-percent rule says monthly rent should be at least 1% of the price. Many solid markets never meet it. Use it as a screen that fails closed, not as a reason to buy.
- Price includes the repairs required to get the rent you typed.
- Rent is the rent after those repairs, not a projection from a different building.
Formula
Target rent = price × 1%. The result is actual rent minus that target.
Worked example
With the figures already in the form, rent above or below 1% of price is -$400.00.
Questions
What if my city never hits 1%?
Then the rule is telling you cash flow is harder there, not that every purchase is a mistake. Cap rate and cash-on-cash are the next pages.
Does it include expenses?
No. A rent that hits 1% and a tax bill that eats it is not a win.