---
title: "1% rule — What It Means | Ondo RE"
canonical: https://www.ondorealestate.com/glossary/one-percent-rule/
---

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# 1% rule

Also called: one percent rule

A screening heuristic that monthly rent should be roughly one percent of purchase price.

The 1% rule is a back-of-envelope filter for deciding which listings deserve a real analysis. It is a triage tool, not an underwriting standard.

It has become harder to satisfy in appreciating markets, and it ignores expenses entirely, so properties that pass can still lose money and properties that fail can still be sound.

## Put a number on it

This term is an input in the calculator below.

- [1% Rule CalculatorCheck if a property's rent meets the 1% rule benchmark.](/calculators/one-percent-rule/)

## Related terms

- [50% ruleA rough assumption that operating expenses will consume about half of gross rent, excluding the mortgage.](/glossary/fifty-percent-rule/)
- [GRM (Gross Rent Multiplier)Property price divided by annual gross rent, a fast screening ratio that ignores expenses.](/glossary/grm/)
- [Cash flowWhat remains each month after rent has covered operating expenses and debt service.](/glossary/cash-flow/)
- [Cap rate (Capitalization rate)Net operating income divided by property value, the unlevered yield used to compare properties.](/glossary/cap-rate/)

## More in Investing

- [1031 exchange](/glossary/1031-exchange/)
- [50% rule](/glossary/fifty-percent-rule/)
- [Appreciation](/glossary/appreciation/)
- [CAGR (Compound Annual Growth Rate)](/glossary/cagr/)
- [Cap rate (Capitalization rate)](/glossary/cap-rate/)
- [CapEx (Capital expenditures)](/glossary/capex/)

## Have a question about your own situation?

Ondo handles brokerage, lending, property management and notary under one roof, so the answer does not change depending on who you ask.

[Talk to Ondo](/contact/)[Browse all terms](/glossary/)