Lekisha,If you can buy at a deep enough discount where the basic formula still applies (70% of ARV minus cost of repairs) and you can still sell at a profit after Realtor commissions, that's what matters.Gary

Same question for cash-on-cash formulas.

@kevin zheng    I'm not sure of their exact formula, and whait I'm about to say may be a conincidence because  I have Section 8 rentals in Cleveland as well as Concord, CA and Oakland, CA. 

So, for a fix-and-flip, I would start with this formula:65% of the ARVminus repair costsminus holding costsminus closing costsminus your expected profitgives your MAO - Maximum Allowable Offer.There is some debate about the 65% - some folks only go down to 70%, others take even less discount and it will depend on how competitive the market is.

My guess on your folks long term success would simply be the magic formula of rising rents over time, reducing debt (and increasing equity) as your tenants pay down your mortgage, and in, many areas, handsome price appreciation....Over the long haul it has been an effective formula for many investors even if you can't articulate it (the home prices and rents have just gone plain gone up over 30 years...)Best of luck Philip....

Understand financial formulas, present, future value is about as complicated as it gets and we have calculators for that.

Cap Rates vary and can be derived with numerous variables that impact the cash flow/purchase price formula.

If a property costs too much, you won't get cash flow out of it.Not sure if this helps, or is the right time to show it to you, but here is the formula I use every time I evaluate a rental property for potential purchase (you'll have to include costs for reno in there--put it into the total purchase price).http://www.biggerpockets.com/renewsblog/2013/01/19...That's all in terms of cash flow as a response.

ACTION, ACTION, ACTION!!!! This is my secret weapon.(shhhh)..You must take action for anything to happen...It can't be done thinking about it, wishing for it or just doing nothing. Yes, I made mistakes along the w...

Its not much better, but am I using the right formula?