What it sounds like you're doing is working from the beginning forward.For example:Your thoughts now: purchase price/offer,rehab, exit strategyYour thoughts should be: Exit strategy, ARV(After repaired value), rehab, purchase/offer price(based on formula and exit strategy), cash flow (if renting)/Profit Potential (If flipping)Your exit strategy is important because majority of the time there's less "holding cost" associated with renting, so investors have a higher tolerance for a higher LTV purchase.For Renting, A great rule of thumb is to always try to get at minimum 100% return on the money you put into the deal with unrealized capital gains.

Personally I prefer this formula to waterfalls, prefs, etc. 

Your use of the formula is correct.

Hello all,lets talk about rental expense's.. I currently don't have much of a history of managing rentals so I want to get a good idea before jumping into one.Gross rents (assuming renter pays WSG & Utilities)- Pr...

Use comps to determine ARV, standard formulas to determine purchase price (i.e. 70% ARV minus repairs), and market rates for rehab budget items (i.e. paint per sq ft, cost of appliances, etc.).

Thank you for the kind words - at 75 years old now - I remember years ago when this I became motivated to invest in real estate (really -  my motivation was to make money and quick my low paying job)  I use to take every class and seminar on real estate investing and would read as much as I could all the time about real estate investing -  that is when I was 21 years old, some of the information was junk (seminars leaders trying to make money selling courses and useless information)  and some were really great, but at the time I didn't know what I didn't know, I finally got the nerve and courage to go out and try some of those crazy formulas they were talking about - and guess what - some of those far out creative financing techniques started to work for me - it was really scary because I started to make money - more money than I ever thought was possible with my limited formal education back than, I discovered I made more money than the president of the company I worked for - needless to say - I quit that job and devoted more time to making offers and collecting those large assignment fees - now even today at my age I continue to make offers - at this time the offers have lots of zeros in them ---- so all that good and useless education  paid off.You best teacher is the market - get out there and make offers, look at 50 houses - but don't make offers on those properties until you find the one deal that is absolute right for the profit making - just keep good records - listen to the sellers, do your comps, learn how to write "skinny contract offers", practice "Control and Roll" principals of controlling real estate with no money and assign your contracts using accelerated sales methods. 

You can find formulas on this site and others that suggest a calculated fair price, but you need to know more than that before you enter into a contract.  

Regardless of owner financing yes the price matters, what you pay is one of the most important parts of the formula.

Well, I don't think there is a real world true exact formula, although the test preparers are apparently using one.  

Second, appraisals are formulaic so while they can give you a rough idea, they can come in significantly lower or higher than what someone is willing to pay.You really have to know your market.