As far as the formula, I think it is fair.

However, I want to make sure you have used the 50% formula correctly.50% formula says that over a period of time, expenses should equal 50% of market rents. $650/2 = $325.

Dan,The formula that most investors use is:Max offer = 65% x Market Value - RepairsMax Offer = .65*$90K - $20Kmax Offer = $38.5KI would offer $25K as a starting offer.

You can see this in the song and dance you received about the closing documents being sent to the Title Company.

"70% - Repairs" is a formula for determining if a property may be a potentially good flip candidate.William - $50K and $550 in rent isn't a great deal, but if you have good financing in place (or are paying cash), you can certainly cash flow.

If you expect to make a (profit) margin because of what you know, you need to understand what value you add to to the formula not just guess.

They use all kinds of formulas, get all kinds of return figures, and end up with a plethora of numbers.But as we all know, at the end of the day, they are just numbers.

Steven Hamilton II That formula will bring me close to 0 or negative ARV is 25k - 30k repair is excess of 25k retail without sweat equity which I can not do in IRA to make it worthwhile which is why i am looking to distribute property. does that make sense to you?

Everyone has there own magic formula that works for them.

Take 75% of rents-PITI and add to your personal gross income.If you want a conventional conforming loan (best interest etc) use 28% of your gross income for PITI on your new home.There are more aggressive formulas but if want 3.875% 30yr then the above will get you there, assuming good credit and high quality property, and not exceeding 36% gross total personal debt including PITI for home.