There are several ways to work the figures and see if you want to do a deal. It does not matter which order you use. You cab figure the ARv first then subtract the fix up costs and profit to get to the top dollar to pay or any other method. I sometimes do the what if I pay this and then add the fix up and other costs and subtract from the ARV and then see how much the profit could be.
On the building I just bought I was way off. At first I thought it may be worth $500K and I could buy it for $165K and fix it up for $100K. After digging deeper the repair costs better than doubled to $220K due to lender required repairs but the appraised value after those repairs went to $725K giving me even a better potential profit. It is such a great deal I call it a no brainer. No need to figure so much because it is such a great deal.
Closing costs can be tricky. You need to just get the costs of each item and add them up. Are you paying a commission to a buyers agent or is the seller including it in the sales price. How about the title insurance, Who pays. Usually the buyer pays for the loan fees such as points, prepaid interest, and a tax and insurance escrow fund perhaps. The points on my building were $20K and another $23K in prepaid interest for 5 months. What a lick but the deal is still ticking. Some of the smaller closing costs are usually shared by the seller and buyer depending on the contract. All the expenses are negotiable. Your agent and title company can give you a better feel for the numbers. I always am trying to get the seller to pay more or find a better cheaper way to get the deal closed. The construction management fee for my building was first estimated at $5K and i got it down to $3 by asking the lender to get another bid.
Do not forget to figure inspection fees and carrying costs including taxes and insurance for the time you own the property. Taxes on my building are $7K per year which and add up over 6 months to $3.5K in a hurry.
It all adds up so be careful and figure it all but at the same time do not figure so much that you miss the overall big picture and miss a great deal. I saw my building listed on Thursday and had it under contract and in the title company with the earnest money by early Friday afternoon and sight unseen as it is 3.5 hours from my house. I drove down Saturday to make sure I wanted to do the deal.