My personal formula is a little bit more conservative than 6 months PITI, but my down payment funding plan is much more aggressive than average so I need to have additional cash on hand to balance the risk.

Brandon Foken, I would evaluate it several ways. as a flip, i will take the formula you stated. as a buy and hold i am taking 70% arv and looking at my all in number coupled with the 2% rule.

And that crazy 90% +repairs = blah blah...some HMLs will lend on that formula (and some will lend less than that). 

Use the the following formula to figure out what the current seller is suggesting the cap rate is for the property you are evaluating:R = NOI/Sales PriceR = Cap RateNOI = Net Operating IncomeSales Price = 345,000Based upon the numbers you presented, the seller is suggesting that the cap rate for this property is a little shy of 8%.

For a fix and flip or even a scrape, you would need to apply the 70% formula.

Where would you work rehab costs into your formula?

There is no magic formula. 8)

I would say that Mike's method is more conservative.Others more into the details have posted some pretty clear formulas.

But I've often heard that acceptance of offers is based on a formula related to BPO and time on market.

This is the magic formula.