1% Rule Calculation

[Max Householder]

A few quick questions about the 1% rule while digesting the BP Intro to Real Estate Analysis.

Do you subtract vacancy from gross monthly rent to get the numerator?

What do you use for the denominator? A) Just the purchase/list price of the property? B) The the total cost to acquire it (including closing costs, repairs, etc.)? C) I also saw another website that said to only use the mortgage principal, but this seems strange since you might be paying cash.

Thanks in advance!