2% Rule in Real Estate Calculator
A strict real estate screening rule stating monthly rent should be at least 2% of the purchase price, targeting high cash-flow investment properties.
Calculate 2% Rule
2% Rule Formula
Total monthly rent (all units, before any expenses)
Total acquisition cost including purchase price and closing costs
Rent-to-Price Ratio
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What is 2% Rule?
The 2% rule is a real estate screening test: a rental property passes if its gross monthly rent is at least 2% of the purchase price. To calculate it, divide the monthly rent by the all-in purchase price and multiply by 100, so a $100,000 property needs at least $2,000 a month in rent. It is a stricter variant of the 1% rule, used by investors after maximum cash flow in lower price-point markets, and such deals are rare in most major US cities. Like the 1% rule, it is a pre-filter, not a final investment decision: a property that meets it almost certainly has a strong cap rate and cash-on-cash return, but rent comparables, neighborhood quality, deferred maintenance and the true expense load still need checking.
Worked Example
Hypothetical figures
Source: Investopedia — 1% Rule in Real Estate (the 2% rule is the same test with a 2% threshold) (2026-10-13)
How to Interpret 2% Rule
📚 Advanced Real Estate — Complete the path
- BRRRR Return
- DSCR
- Vacancy Rate
- 50% Rule
- 2% Rule