Rent-to-Price Ratio Calculator

The rent-to-price ratio measures monthly rent as a percentage of the purchase price. It helps investors quickly screen whether a property is likely to generate positive cash flow. A 1% ratio means the monthly rent equals 1% of the property price.

Generally, 1% or higher is considered strong for cash flow investors (the "1% rule"). Ratios between 0.7% and 0.99% are moderate and may still work depending on expenses, appreciation, and local factors. Below 0.7% typically signals weak cash flow potential.

Rent-to-Price Ratio = (Monthly Rent / Purchase Price) x 100. For example, a $250,000 property renting for $2,500/month has a 1.0% ratio.

In many major metros, the 1% rule is difficult to achieve due to property appreciation outpacing rent growth. However, it remains achievable in secondary and tertiary markets across the Midwest, South, and parts of the Northeast. Think of it as an ideal target rather than a hard requirement.

The ratio does not account for operating expenses, vacancy, property taxes, insurance, or maintenance costs. A property with a great ratio but high taxes or deferred maintenance may still lose money. Always run a full cash flow analysis before making investment decisions.