The most we can pay for a house and still make money — worked out three different ways, and we always take the lowest one. You never say any of these numbers to a seller. This is so you understand what Julian is doing with your notes.
Build this number line-by-line in the tool.
Pick Light when the house is livable and mostly needs updating — paint, carpet, light fixtures, maybe appliances. Pick Heavy when the big expensive things are involved: the kitchen and bathrooms are being rebuilt, or the roof, furnace, wiring, or plumbing must be replaced. Not sure? Ask the seller the years: “Roof, furnace — roughly what years?” Anything original to a pre-1990 house usually means Heavy.
A cash buyer never pays full value — the gap is what pays for their repairs, their costs, and their profit. These two boxes hold that percentage. You almost never change them. Julian sets them for each market, and lower means we must offer less.
Why heavy work uses a smaller number: the more a buyer has to repair, the more can go wrong and the longer their money is tied up — so they need a bigger discount to take it on. A house worth $200,000 fixed up: light work, a buyer may pay around $140,000 (70%). Heavy work, closer to $100,000 (50%).
70% rule (adj.): ARV × a location factor, minus repairs and your fee — the workhorse. Factor scales up in higher-value areas and down in thin-comp areas.
Merrill: ARV minus a flat 20% that stands in for the end-buyer's transaction, holding, and profit margin, then repairs and fee.
Regional flat %: ARV × a single percentage that already absorbs repairs — calibrated per market and rehab depth — then just your fee.
Take the lowest as your ceiling. Calibrate the regional %s from real flipper buys quarterly.