Of course you're also multiplying the number of problems as well.Thanks everyone for the feedback.

I multiply that value by 0.7.  

Then take that # and multiply by 1.25 and you've probably got a good rehab cost #.  

Why is the ARV being multiplied by 70%?

Multiply your average $/Sqft by your properties size and that will get you close.

Flips are a great way to multiply capital, even a better way of creating capital (by using all hard money).

For example, if a triplex sells in West Oakland for 700k and is pulling in 36k per year in gross rental income (1k per unit, far below market), the gross rent multiplier is 19.5 (pretty high).

@Liam Morris - Josh and Brandon aren't talking about taking 50% of the Cashflow - they are talking about taking 50% of the gross rent - say $2,000 multiplied by .5 gets you $1,000.

I can add/subtract/multiply/divide.

What I keep finding out is that my target price is always at least 20% below seller's asking price.Here are my rules/metrics:total economic loss after property is stable is 12% (15% in lower quality areas)incremental rent growth after the property is stable is 2%expenses grow by 2%/yearproperty tax is 90% of the purchase price multiplied by a local tax rate (usually doubles tax from whatever seller pays)payroll $1000-1200/unit regardless of the property size (brokers claim that 30-units don't need payroll but I don't believe them :-) )reserves of $300/unit counted in expensesexit cap rate is 100 basis points higher than current cap rate (e.g. exit at 8% if current cap rate is 7%)cash-on-cash ROI 10%+ starting in the second year; first year may be lower if this is a value-add5 years total ROI (assuming sale) is at least 100%IRR 15%+ over 5 years (al ROIs are net to investors after 20% sponsor override)I can adjust may metrics to some degree but in order for me to get to the seller's acceptable price I have to adjust most or all of them to unsustainable levels.So, what should I do other than keep underwriting and waiting until the market turns down and all of a sudden my numbers would make sense for a seller?