1 Percent Rule Calculator

Formula

The formula to calculate the 1 Percent Rule (R) is:

\[ R = P \times 0.01 \]

Where:

$ R $ is the minimum monthly rent required for the property to be considered a good investment ($)
$ P $ is the purchase price of the property ($)

1 Percent Rule: A guideline used by real estate investors to estimate the profitability of a potential rental property. According to this rule, a property should rent for at least 1 percent of the purchase price in order for it to be considered a good investment.
Minimum Monthly Rent (R): The amount of rent that should be charged per month according to the 1 Percent Rule.
Purchase Price of Property (P): The cost of buying the property.

Let's say the purchase price of the property is $200,000. Using the formula:

\[ R = 200000 \times 0.01 \]

We get:

\[ R = 2000 \]

So, the minimum monthly rent should be $2,000.