Rental Expense Ratio Calculator – 50% Rule & 1% Rule Check (Free)

Rent vs. expense ratio calculator

What share of your rent goes to operating expenses? Compare it with the 50% rule of thumb and check the 1% rule.

Results

Expenses + mortgage as % of rent–

50% rule: estimated expenses–

50% rule: estimated cash flow–

Rent as % of price (1% rule)–

Operating expense ratio–

Formulas

Operating expense ratio = operating expenses ÷ rent × 100
50% rule: expenses ≈ 50% of rent, so cash flow ≈ rent × 0.5 − mortgage
1% rule: monthly rent ≥ 1% of purchase price

Example: $900 of expenses on $2,000 rent is a 45% expense ratio. With a $700 mortgage, 80% of the rent is spoken for. The 50% rule estimates $300 a month of cash flow ($1,000 − $700). At a $180,000 price, $2,000 rent is 1.11% of price, which meets the 1% rule.

The 50% and 1% rules are quick screens, not underwriting. Taxes, insurance and the age of the property vary a lot. For a full estimate, use the cash flow calculator.

Related calculators

GRM & 1% rulePrice ÷ annual rent, with a 1% rule check.Vacancy costWhat an empty unit really costs.Cash flow calculatorMonthly NOI, mortgage, cash flow and DSCR.

FAQ

What is the 50% rule in real estate?

A rule of thumb that operating expenses (not the mortgage) will average about half of rent over time. It's a quick screen; your actual ratio can be much higher or lower.

What is a normal operating expense ratio for rentals?

It varies with property age, taxes, insurance, who pays utilities and whether you use a manager. Track your real numbers for a year to learn your own ratio.

Does the 1% rule still work?

In many high-price markets, few properties meet it. Treat it as a filter for further analysis, not a buy or don't-buy decision.