If you're still screening rental properties with the 1% rule, you're leaving money on the table — or worse, passing on great deals.

The 1% rule says your monthly rent should be at least 1% of the purchase price. Buy a $200K property, rent it for $2K/mo. Simple, right?

Problem is, in most markets in 2026, that math doesn't work anymore. And investors who stick to it rigidly are sitting on the sidelines while others are building portfolios.

What I use instead:

• Cash-on-cash return > 8% — This accounts for your actual money in the deal, not just the purchase price. If you're using leverage (you should be), this number matters way more than the 1% rule.

• Debt service coverage ratio (DSCR) > 1.25 — Your net operating income divided by your mortgage payment. If it's above 1.25, you have a healthy buffer. Below 1.0? You're feeding the property every month.

• Break-even occupancy < 75% — How full does the property need to be to cover costs? If one vacancy sinks you, the deal is too thin.

The real edge isn't a single metric — it's stacking multiple filters so you only buy deals where the math works from every angle.

I break down real deals like this every week inside Equity Edge Academy. Numbers, comps, the whole picture. If you're a W-2 earner serious about building passive income through real estate, this is where you start.