1% Rule - w or w/o vacancy?

[Kevin Stein]

Hello,

I've got a quick question when calculating the 1% (or 2% or whatever percent you like) rule.  Do you run the calculation against gross rent or net rent?  I'm wondering if people take their chosen vacancy factor into account with this rule?

Example:

$1100 gross rents with a 1% rule = $110,000.00 max offer.

$1012 net rents (after 8% vacancy factor deducted) with a 1% rule = $101,200.00 max offer.

Obviously you would want to get the lowest price possible, but I'm just curious when running this quick and dirty rule of thumb how people are doing it.  Thanks!