Should 1% be on asking price or on asking price minus down paymen

[Abulele Woldulele]

Hi guys,

I have 3 questions about the 1% rule for rental properties. Is the 1% computed on the asking price or is it calculated on asking price minus down payment?

Consider the following scenario:

Asking price = selling price = 100,000

Down payment = 20% = 20,000

Base = 80,000

1% of 100,000 would be 1000

1% of 80,000 would be 800

My second question:

Is there a similar rule for residential properties?

Last question:

How do you account say $20,000 of fixing up the property to make it rentable?