50% Rule Calculator

The 50% rule is a rule of thumb, not a formula: a rental property’s operating expenses — everything except the mortgage — tend to run about half of its gross income, leaving roughly 50% as net operating income. Pair it with the 1% rule (gross monthly rent at or above 1% of the price) and you can triage a listing in seconds, before you have pulled real tax or insurance numbers.

Enter the price, financing, and rent above. The calculator applies the 50% rule to estimate expenses and NOI, then checks whether what is left covers the mortgage and whether the deal meets the 1% rule. Everything runs in your browser — your numbers are never uploaded. When a deal passes this screen, run it through the cap rate calculator and DSCR calculator with real numbers.

What is the 50% rule?

The 50% rule says operating expenses (taxes, insurance, maintenance, repairs, management, turnover and vacancy reserves) average out to about 50% of gross operating income over time. So a quick estimate of NOI is simply half of gross rent. It is a screening heuristic to reject bad deals fast, not a substitute for real underwriting.

estimated NOI ≈ 50% × gross annual income
estimated expenses ≈ 50% × gross annual income
monthly cash flow ≈ (NOI ÷ 12) − monthly mortgage payment

What is the 1% rule?

The 1% rule says a deal is worth a closer look when gross monthly rent is at least 1% of the purchase price — a $300,000 property should rent for $3,000 or more per month. At a 30-year mortgage it tends to correlate with positive cash flow. Like the 50% rule it is a screen: in high-cost markets few deals meet it, and in cheaper markets it is a low bar.

rent-to-price ratio = gross monthly rent ÷ purchase price
meets the 1% rule when the ratio is ≥ 1.00%

How accurate is the 50% rule?

It is a rough average. Real expense ratios range from about 35% (newer, low-maintenance properties in low-tax areas) to over 60% (older properties, high turnover, expensive insurance). New construction may run well under 50% in year one and climb as repairs accumulate. Use the 50% rule to kill obviously bad deals, and the cap rate calculator with actual figures once a deal survives.

50% rule vs. cap rate and DSCR

The 50% rule and cap rate both ignore your personal finances, but cap rate uses actual NOI while the 50% rule assumes it. DSCR adds the loan and asks whether income covers debt — what a lender checks. A practical flow: use the 50% / 1% rule to screen, cap rate to value, then DSCR and cash-on-cash to test financing. The glossary defines each term.

Frequently asked questions

Is the 50% rule accurate?

It is a rule of thumb, not a measurement. Real expense ratios vary from roughly 35% to over 60% depending on the property’s age, location, taxes and insurance. Use it to screen out bad deals fast, then underwrite with actual numbers using the cap rate and DSCR calculators.

What does the 1% rule mean?

It means gross monthly rent should be at least 1% of the purchase price — a $300,000 property renting for $3,000 or more per month. Deals that meet it tend to cash-flow at a 30-year mortgage. In high-cost markets few listings meet it; in cheaper markets it is a low bar.

Does the 50% rule include the mortgage?

No — it estimates operating expenses only (everything except debt service). To get cash flow you subtract the monthly mortgage payment from the rule’s estimated NOI, which this calculator does for you.

Can I rely on the 50% rule to buy?

No. It is a screen to triage listings in seconds. Before making an offer, underwrite with actual property tax, insurance, HOA, repair estimates and management costs — the cap rate, cash-on-cash and DSCR calculators here take real inputs.

Does this calculator upload my data?

No. All math runs locally in your browser. The inputs never leave your device — confirm it in your browser’s network tab while editing the fields.