The Rent-to-Value Ratio (RV Ratio) compares a property’s monthly rent to its market value. It’s sometimes referred to as the “1% Rule.”

Formula:
RV Ratio = Monthly Rent ÷ Property Value

Why It Matters

• Fast Screening: Helps investors quickly decide if a property is worth deeper analysis.

• Cash Flow Potential: Higher ratios often indicate stronger gross cash flow potential.

• Rule of Thumb, Not Final Answer: RV Ratio doesn’t account for expenses, financing, or vacancy.

Example

Phoenix single-family home:

• Monthly Rent = $2,800

• Property Value = $420,000

RV Ratio = 2,800 ÷ 420,000 = 0.67%

That’s below the “1% Rule,” but still common in Phoenix submarkets with strong appreciation potential.

Phoenix Context

• Many Phoenix neighborhoods average 0.6%–0.8%, with higher ratios in workforce housing areas.

• Premium markets (Scottsdale, Arcadia) usually have lower ratios but stronger appreciation.

• Smart investors use RV Ratio as a first pass, then dig into Cap Rate, Cash-on-Cash, and DSCR.

Final Thoughts

RV Ratio is a quick screening tool — think of it as the “first impression.” But the real decision comes from a full underwriting.

As your Phoenix investor-friendly agent, I’ll help you shortlist properties with solid RV Ratios, then run full metrics so you can invest with confidence.

📞 Contact Me Today
Brian Harris
Investor-Friendly Real Estate Agent
📍 Phoenix, AZ
📧 [email protected] | 📞 602-684-0198
🌐 www.azdreamsource.com