I'm sure they are out there but this is just a rule of thumb and I would rather use J Scott's approach when he analyses deals outlined in his book.You factor in your desired profit as a cost and you work backwards.

I’m considering countering with a price closer to the market value, but I’m curious how others approach deals like this.Looking forward to hearing your thoughts!

This approach could be the fastest and most cost-effective way to regain possession of the property and prepare it for new tenants.4oShe put in the post that it's located in Edmonton, Alberta, Canada.

They have been incredibly transparent but they are currently deciding on a capital call or selling the property at a major loss (70-80%).

Incredibly poor business deal. 

So I said, "well, if that isn't the path, what is the better approach?"

And with price and rent appreciation in CA, we feel confident in the long term approach with these properties.

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

Total profit less closing costs and commissions will be about 42,500 each or 85k total.I would for sure get a construction loan, may be worth approaching 2 or 3 different banks and getting separate construction loans from different banks. 

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.