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 monthly rent should be at least 1% of purchase price. A $200K property should rent for $2,000/month.

Sounds clean. Problem is, in most markets in 2026, almost nothing passes this test. And the deals that DO pass it are usually in war zones with massive vacancy and maintenance costs.

Here's what I actually use to evaluate deals:

Cash-on-Cash Return (target: 8%+)

How much cash flow you earn relative to the cash you put in. This accounts for leverage, which the 1% rule completely ignores.

Debt Service Coverage Ratio (target: 1.25+)

Net operating income divided by your mortgage payment. If this is below 1.0, you're losing money every month. Above 1.25 gives you a cushion for vacancies and repairs.

Break-Even Occupancy (target: under 75%)

What occupancy rate do you need to cover all expenses? If you need 95% occupancy just to break even, one bad month wrecks you.

The real skill in rental investing isn't finding "good deals" — it's building a system to evaluate every deal the same way so you can move fast when one hits.

I teach this entire framework inside Brick & Equity. We break down real deals every week using these exact metrics.