The 1% rule is a screening tool, not a verdict
If monthly rent is ≥ 1% of purchase price, the deal usually cashflows in a 7% rate environment. Coastal markets almost never hit 1%; Midwest cashflow markets often clear 1.2%+. Use it to triage listings, then underwrite the survivors in detail.
Don't forget the silent expenses
Real-world rental P&Ls die from vacancy, turnover (paint/clean/list/2 weeks empty), capex (HVAC, roof, water heater), and bad tenants. The 12% maintenance + capex default is a stabilized number — push to 18–22% for any property over 40 years old.
- • Vacancy: model 5% baseline, 8–10% in soft markets.
- • Turnover: ~$1,500–3,000 per turn (paint, clean, listing fee, lost rent).
- • Capex: budget $150–300/door/month for major systems.
Self-management vs property management
Pro management runs 8–10% of rent plus leasing fees. Self-managing keeps that money but costs hours and screening expertise. For out-of-state rentals, pro management is almost always the right call — your time is worth more than 8% of $1,800.
FAQ
What's a good monthly cashflow per door?
$100–$200 per door after all expenses is a healthy floor for buy-and-hold investors. $300+ is excellent but rare in 2026's rate environment unless you bought right or refinanced cheap.
Does this calculator include appreciation?
No — this is a pure cashflow tool. Use the residential property ROI calculator for cap rate, cash-on-cash, and 5-year appreciation modeling.
Why 5% vacancy by default?
Across stabilized US single-family rentals, 5–8% annualized vacancy is realistic when you blend turnover days, listing days, and bad-debt write-offs. Class A new builds run 3–5%, Class C urban can run 10%+.
What if I pay cash?
Set down payment to 100% and the loan goes away — net cashflow jumps but cash-on-cash drops (you have more money tied up). Cash deals make sense for capital preservation, not yield maximization.
Does it work for small multifamily?
Yes — set 'rent' to the total combined rent of all units. Push the maintenance % to 14–18% to reflect higher per-door wear in 2–4 unit buildings.