Landlords swear by the 1% rule for rental properties: How a simple math trick saves bad investments

If you're looking to invest in real estate, you've likely faced the anxiety of trying to discern whether a prospective property is going to be a winner or a loser.

While there's no 100% perfect way to predict profit — like any investment, there is always risk involved — there are calculations that experts make when they're evaluating a potential investment.

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One such calculation is the 1% rule, a quick way to tell whether you should take a closer look at a property, or walk away ASAP.

The 1% rule is a simple calculation to see whether a property will provide an adequate monthly cashflow.

You simply calculate the monthly rent you'd be able to charge, and see whether it is at least 1% of the purchase price. For example, a $200,000 rental property should bring in at least $2,000 a month in rent.