1% rule
A quick screen used by rental investors: monthly rent should be at least 1% of the purchase price. A $200,000 property should rent for $2,000. Getting harder to find in most markets.
Your Room opens on showings and offers, with everything before the listing already ticked.
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See how it worksWhere this comes up: on the market
Part 1 of 4
Why a seller cares
The 1% rule is the fastest screen an investor runs on your home: does the monthly rent reach 1% of the price. In most markets today it does not, and an investor using it will offer well under your asking price.
Part 2 of 4
A simple example
Your home is listed at $300,000 and would rent for $1,700. The 1% rule wants $3,000 a month, or a price near $170,000.
| The price | Against a $1,700 rent |
|---|---|
| $300,000 | Fails the rule at 0.57%; no investor offer |
| $170,000 | Passes; an investor's opening number |
| Most family buyers | Never heard of the rule and pay $300,000 |
The 1% rule explains investor offers that look absurd. The market they are buying in is a different one.
Part 3 of 4
What people get wrong
That the 1% rule says what a home is worth. It says what an investor wants to pay, which is a different question.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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