Below is how I am valuing properties and would really appreciate if someone could chime in if I am off the mark.

BRRRR Strategy Total Investment $252,500.00 ARV $300,000.00 Cash-out Refi Loan (75% ARV) $225,000.00 Cashout Refi Down Payment $27,500.00 Cash on Cash Return as Rental 9.47% Forced Appreciation Gain $47,500.00 5 Year Appreciation (4%) $64,995.87  If you have questions on the financials or would like more detail, please leave a comment below.

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Unlikely it has appreciated in value.I would offer below $232K and let them negotiate you up or walk away.

Your basis in the property is lesser of the below in the year it was converted to rental: 1) your adjusted basis - ( purchase price adjusted for other various stuff -- such as settlement cost, improvements to your house and so forth. 2) FMV ( which is not a tax assessment) if you have used the wrong basis, in 2016,  to keep things simpler and practical, I would catch up the depreciation to make it correct this year. your depreciation basis is determined on the year it was converted to rental, and generally, does not evaluate each year.If any improvements are made to a property, they will be depreciated as a separate asset. 

I may be biased since I am located here, but Memphis is definitely a profitable market and you can still find deals at 70% or less below retail.

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Below I have compared 2 examples of selling traditionally with a Realtor at 6% commisions (which it may be less as it is negotiable) vs selling with opendoor or similar service.Comparing Opendoor to a Traditional Sale with a Realtor$400,000 Home via OpendoorHome Value: $400,000Sales Price: $375,000Charge 12%: $45,000Commissions 7%: $26,250Total Costs via Opendoor: $71,250Net Proceeds to Owner: $303,750$400,000 Home via a RealtorHome Value: $400,000Sales Price: $400,000Traditional Closing Costs 3%: $12,000Commissions 6%: $24,000Total Costs via a Realtor: $36,000Net Proceeds to Owner: $364,000In this Example Selling with a Realtor will save you $60,250!!!

The problem is that you have to find a house where someone is in a bad situation so that you can buy the house at a below market price.

That's a smart way to filter out the ineligible prospects.