Subtract $5.4k/year negative cash flow.  

Removing the lead, asbestos, mold doesn't really add value so much as not subtract it.

Try to avoid throwing everything away.The resident can collect monthly payments until the property is purchased in full by the GNA, or can cash out and a traditional loan will be sought for GNA to finish the purchase.If there is an “owner carry” deal currently established, then subtract the remaining rehab costs as a principal payment.If the GNA is simply purchasing the property, then it needs to fall into “70% rule”.Purchase price = 70%ARV - Est rehabThis option typically leaves less money for the original homeowner, when compared to the “owner carry” structure.Allow for equity transfer to other properties in the GNA portfolio.This option might allow for the lowest cost to process everything,Bring every aspect of the property up to common standards.

I googled this and found that they multiply x .80 of the fair market value then subtract repairs and realtor fees, etc.

Subtract that amount plus an extra amount from the list price to make a target of leaving a readjustment clause in the offer do unexpected surprises..Then if you get an accepted offer, then go back to the bank.

Just add the monthly expenses of properties in a 3 sq mile area that are the same sq ftg (or where the largest is within 10 % more than the smallest) and subtract that sum from the rents using the same size and location criteria. 

Why would also subtract out the interest that was already paid over the previous 5 years?   

I suppose you want to make money so you subtract $20k as your profit.

Did you subtract the profit margins, repair costs and a buffer from the ARV?

You can also get pretty close with overhead measurements from Google Earth, although math is required, and don't forget to subtract the garage, but ideally if you get to the point of making an offer you will have seen the house and/ or the owner will tell you how big it is.