Setting criteria for singal family homes

[Thomas Rodgers]

In some of the books i have been reading they talk about setting criteria and part of their criteria is buying houses at a 20% discount and with opportunity to improve the value.

Im not sure on what they are discounting. Is it the comps of the properties sold nearby, the arv, or the list price? And also do you subtract the estimated rehab cost from the to get their purchase price for their offer? Is this even realistic?

Im trying to set up a good criteria i can give to to people once i get started on acquiring my first property in the Dayton - Cincinnati OH area.