How much you can afford to spend on an investment property depends on your personal details — like credit score and debt-to-income ratio — as well as the terms of the loan you’re pursuing. Using the 1% rule to determine how much you’ll need to charge in monthly rent before buying an investment property can help you figure out if a property is right for you. The 1% is calculated by multiplying the total purchase price by 1%. If the purchase price is too high and causes the required monthly rent to skyrocket well above the median rent price in your location, you likely won’t be able to find appropriate tenants. In this situation, it’s better to look for a better priced property.