Rental Property Rule Screener
Run the 1%, 2% and 50% rules against a property, and see where each screen is blind — two buildings can pass identically and cash-flow oppositely.
These are screens, not analyses — their job is to sort a long list quickly, and they are good at that. The cash-flow figures here assume 25% down over 30 years at 7% with 6% vacancy. Nothing is uploaded.
The 1% rule reads two numbers, and taxes are neither
Rent over price. That is the whole rule, so two properties at the same price commanding the same rent get the same verdict however far apart their running costs are. Both buildings below pass cleanly at exactly 1.00%. One earns $182 a month and the other loses $418.
| Rent ÷ price | 1% rule | Expenses | Cash flow | Cap rate | |
|---|---|---|---|---|---|
| Low-tax county | 1.00% | passes | $700/mo | $182/mo | 7.08% |
| High-tax county | 1.00% | passes | $1,300/mo | $-418/mo | 3.48% |
That is not the rule being imprecise — it is the rule not having the input. Property taxes alone vary several-fold between counties, and insurance has moved sharply in coastal and wildfire states. Notice the last column: the cap rate, which can see expenses, separates the two immediately.
The 50% rule is a guess, not a check
The 50% rule assumes operating expenses take half of gross rent. Since the only input it has is the rent, it predicts identical expenses for both properties — and misses in opposite directions, by 43% one way and 23% the other.
| Real expenses | The rule guesses | Off by | True expense ratio | |
|---|---|---|---|---|
| Low-tax county | $8,400 | $12,000 | +42.9% | 35% |
| High-tax county | $15,600 | $12,000 | -23.1% | 65% |
Used as a sanity check against itemised numbers it is genuinely useful — a listing claiming a 25% expense ratio is worth a second look, and the rule is how you notice. Used instead of itemising, it substitutes a national average for the two figures that vary most by location, which is the opposite of what a screen should do. The honest use is to run both and investigate the gap, rather than to pick whichever number is more encouraging.
How to use
- Enter price, gross rent and your operating expenses.
- Read the 1% and 2% rule verdicts.
- Compare the 50% rule guess against your itemised figure.
- Check the cash flow the screens cannot see.
Frequently asked questions
What is the 1% rule?
Monthly rent should be at least 1% of the purchase price. It is a fast way to sort a long listing page, and that is genuinely what it is for — the trouble starts when it is used as a verdict rather than a filter.
Does passing the 1% rule mean a property works?
No. The rule reads price and rent and nothing else, so two properties at the same price commanding the same rent get the same verdict however far apart their taxes are. Both examples here pass at exactly 1.00%: one earns $182 a month and the other loses $418.
Why does that happen?
Property taxes vary several-fold between counties, and insurance has moved sharply in coastal and wildfire states. Those are the two costs that differ most by location, and neither is an input to the rule. That is not the rule being imprecise — it is the rule not having the information.
Is the 2% rule just a stricter version?
Much stricter, and in most markets almost nothing passes it. It survives as a benchmark from a period of far lower prices relative to rents, so failing it tells you little about a property bought today.
What is the 50% rule?
An assumption that operating expenses take half of gross rent. Since the only input it has is the rent, it predicts identical expenses for two properties whose real costs differ by $600 a month.
Is the 50% rule useful at all?
As a sanity check against itemised numbers, genuinely yes — a listing claiming a 25% expense ratio is worth investigating, and the rule is how you notice. Used instead of itemising, it substitutes a national average for the figures that vary most by location, which is the opposite of what a screen should do.
So how should I use these?
To decide what to look at, not what to buy. Run the screen to shorten the list, then itemise the survivors. If the screen and your itemised figures disagree sharply, the gap is the interesting part and worth understanding before making an offer.
Does this send anything anywhere?
No. Every figure is computed in your browser, and nothing is uploaded or stored.
🔒 This tool runs entirely in your browser. Nothing you enter is uploaded, logged, or stored.