subtract repairs and your desired profit (plus transcation fees, realtor commissions, etc.) off of your surrounding properties' values, to get what you can offer

If so, how does subtracting points from someone who reduces their participation do that?

Also, the J Scott book should be a very good starting point.Fixed Costs: This should include broker costs, taxes, utilities, transfer taxes, cost of money (of borrowed), etc. for the time you believe the rehab will take.Profit: Determine what you want to make on a deal.Once you have these four numbers, then take your ARV and subtract your (Rehab + Fixed Costs + Profit) and you'll have your maximum purchase price.

After subtracting the expenses of $480 from a rental rate of $950, I just see the $520 net/month. 

If your loss is due entirely to depreciation, line 18 on Schedule E, that means you were positive cash flow before subtracting the paper loss of depreciation.If on the other hand you were negative before depreciation was factored in that is negative cash flow.

Although you know that your contract will have contingencies that allow you to renegotiate the sales price if you find repair issues later through an inspection.REI Statement: “So when we agree on a price tonight, the only thing you will subtract from that price is the principal left on your mortgage.”

Unlikely that they would agree to the tax escrow part though.2) The other option would be to take their number and simply subtract the totals you come up with for closing costs to come up with the new purchase price.

So when we agree on a price, the only thing you will subtract from that price is the principal left on your mortgage.

Would you add/subtract anything from the outline above?

Not everyone agrees, but that's the thinking behind taking 70% of ARV then subtracting rehab and wholesale fee.