Working in up front reno costs in the numbers for rental home?

[Daniel R.]

Curious to see what ways you guys do the math (and the pros/cons to spinning it either way) while doing lots of up front renovation on purchase of a home to prep it for tenants.  Doing very very basic numbers:  Lets say I purchase home X for $100,000 and put $25,000 into it to get it up to par.  Assuming rent is $1,000 a month shooting for the 1% rule, am I at 1% (1,000/100,000) or 0.8% (1,000/125,000).  Like I said, not sure whats better- to include the 25,000 as the purchase price, or to assume that is $25,000 in capex costs.  Thanks for your opinions!