My first recommendation would be to get away from using or trusting AI with underwriting. If order for you to be successful in this business you need to truly understand what a deal is, what actually goes into understanding repair costs and coming up with a good offer. AI in my opinion is going to make people more dumb and I don't want that to come off as me being rude but that's just the truth. AI isn't always correct and there are many times I have had people bring me title curative deals and AI gave them the path to clear the title. I told them that it was incorrect and told them to reply to the AI and tell them what I said and it comes back with "I apologize, that is correct this is how you would actually want to do it based on the laws". When it comes to the deal itself a couple things I would like to know, what is the extent of the repairs because $40k doesn't go crazy far in todays market especially if it is a bigger property sqft wise. I have not comped this but if you are confident in the ARV and the repairs are truly $40k than it doesn't look bad. $255,000 x .7 = $178,500 - $40,000 (Repair Costs) = MAO of $138,000 That's where a buyer would likely want to come in at, now it's buyer dependent some can get work done cheaper meaning they don't mind paying a bit more and then some may want to come in a little less but this gets you in a good range. If you were to offer $120,000 than try to dispo at $140,000 give yourself room to be talked down a little bit I think there is anywhere from $10-20k to potentially be made here as long as your ARV and repair costs are true and match the finish quality of other flip comps in the area.