1% rule for Buy and hold with Rehab Costs

[Cody Kantor]

Hello everyone, New to REI so I'm looking for a little advice and guidance. I may follow up with a more in depth deal analysis post but for now just a general question on how I should be looking at something. I believe I found a great opportunity in a quadplex selling for around $260k. It's in a great area and once rehabbed it should pull in around $3600 in rent total monthly. However I estimate that the property needs at least 100k to rehab (approximately 25k in each unit before I could even begin renting them out.) When looking at the general 1% rule (which I completely understand is a bare bones rough estimate) would I factor in the $100k on the selling price before I estimate the 1% rule? Or is the 1% applied solely to the selling price of $260k? Appreciate any insight you can offer! Thanks! Best, CK