Landlord Expense Calculator
The 60-second screening tool. Apply the 50% rule, 1% rule, and a detailed expense breakdown to any rental in seconds.
Leave blank to use rules of thumb. Fill in to compare against the 50% estimate.
The two rules every landlord should know
Before buying a rental property, two heuristics let you screen a potential deal in less than a minute. Neither is a substitute for a real cash-flow analysis — but they tell you whether to keep looking or move on.
The 1% Rule
Properties that satisfy the 1% rule generally cash flow at reasonable interest rates. Properties that miss it badly almost never do.
This rule has gotten harder to satisfy since 2020 — strong price appreciation outran rent growth in most US markets, pushing the typical rental into the 0.5–0.8% range. In coastal cities you'll struggle to find 0.5%. In Midwest and Rust Belt markets, 1%+ properties still exist.
The 50% Rule
Across thousands of properties over long holding periods, operating expenses (everything except the mortgage) average about half of rent. This includes taxes, insurance, maintenance, vacancy, management, CapEx, and surprises.
It sounds high — in any given year a well-maintained property might come in at 30-40%. But average that over the eventual roof replacement, the bad tenant, the long vacancy, the HVAC failure, and 50% is more realistic than the rosy spreadsheet most new investors build.
A property rents for $1,850/month and is listed at $195,000.
Just under 1%, so borderline. Now let's check expenses against the 50% estimate:
If real expenses come in much higher than $925/month, the deal probably doesn't work. If they come in lower, you might have something.
Detailed estimate (defaults): taxes ~$195/mo (1.2% annual), insurance ~$81/mo (0.5% annual), 7% vacancy ($130), 8% maintenance ($148), 8% management ($148), 5% CapEx ($93) = ~$795/mo.
The detailed estimate is below the 50% rule, which suggests this could be a workable deal. Now run it through a full deal analyzer to see cash flow after the mortgage.
Where the rules of thumb break down
- Brand-new construction — first 10 years might run at 30-35% of rent for opex. The 50% rule overestimates.
- Old properties (pre-1950) — major systems failing constantly. 60-65% of rent is more realistic.
- Class A in major metros — high property taxes can push opex above 50% even on premium rents.
- Tax-favored states — low-tax states (Florida, Texas, Tennessee) can get to 40-45% opex on stabilized properties.
- HOA properties — HOA dues are pure opex with no offset; they push the ratio higher.
Use the rules as a starting filter, but don't buy or skip a deal based on them alone.
The opex line items most beginners underestimate
- CapEx — the big-ticket items (roof, HVAC, water heater, appliances). These don't happen every year, but average 5-10% of rent over a 10-year hold. Set the reserve.
- Vacancy — even good properties go vacant. Budget 6-10% of rent.
- Turnover costs — every tenant turn costs 1-2 months: paint, cleaning, repairs, lost rent, advertising.
- Property management — even if you self-manage now, value your time at 8% so the deal works when you delegate later.
- Pet/tenant damage — beyond the security deposit, there's always damage that doesn't quite qualify.
- Legal and eviction — one eviction can cost $3,000-$8,000 in lost rent + legal fees.
Frequently asked questions
Is the 1% rule still relevant in 2025?
It's a much higher bar than it used to be. In 2010-2015, the 1% rule was achievable in most US markets. Today, true 1% properties exist mainly in midwestern and southeastern secondary cities, in the $80K-$200K price range, often requiring some rehab. In hot coastal markets it's effectively extinct — investors there bet on appreciation instead of cash flow.
What about the 2% rule?
The "2% rule" applies to properties where monthly rent equals 2% of purchase price. These have become extremely rare — typically only in very low-cost markets with significant rehab requirements or in lower-class neighborhoods. When they exist, they cash flow strongly but come with management challenges.
Do these rules work for multi-family?
Yes, but slightly different thresholds. Small multi-family (2-4 units) generally hits 0.8–1.2% on the 1% rule, with operating expenses closer to 45-50% of rent. Larger commercial multi-family (5+ units) gets evaluated by cap rate and DSCR instead — the simple rules don't translate well.
How do I estimate property taxes for a property I don't own yet?
Check the county assessor's website — current tax records are public. Be aware many states reassess upon sale, so the new tax bill may be higher than the seller's bill. Always confirm with the assessor whether reassessment applies.
Should I include the mortgage in the 50% rule?
No. The 50% rule covers operating expenses only — mortgage is separate. The point is that before you pay your mortgage, expect roughly half of rent to disappear into taxes, insurance, maintenance, vacancy, and reserves.
Rules of thumb are screening heuristics — actual results depend on local taxes, condition, market, and tenant quality. Always run detailed numbers before committing.