The 1% rule, 50% rule and GRM
1% rule: monthly rent ≥ 1% of purchase price + repairs
The 1% rule is a quick filter: a $200,000 property should rent for at least $2,000 a month. It is not a return calculation, and in many high-cost markets almost no property passes, while some low-cost properties pass but carry high vacancy or repair risk.
The 50% rule
The 50% rule estimates that operating expenses, excluding the mortgage, will consume about half of the rent over time: taxes, insurance, maintenance, management, vacancy and capital repairs. Subtract the mortgage payment from the other half for a rough cash flow estimate.
Gross rent multiplier
GRM divides the price by annual gross rent. Lower is better when comparing similar properties in the same area. Like the 1% rule, it ignores expenses and financing.
Use rules to screen, not to decide
These shortcuts help you discard listings quickly. Before making an offer, replace them with actual rent comparables, a tax bill, an insurance quote and a financing quote in the rental property calculator.