Getting a house with high taxes and and a lein?

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Getting a house with high taxes and and a lein?

Richard Stackonis
Dayton, OH · Member since 2020 · 4 posts · 1 vote
Hello everyone, Im brand new to real estate investing and have started searching for information on the matter. Reason being is because I have found myself in an odd situation and would like some feedback from some seasoned real estate investors!

Recently my uncle came to find out thay his ex-wife had signed the deed of her old house into his name. He found this out 10 years later(last month). Not wanting to have to deal with it, he told me that since Ive shown an interest in real estate, that he would sign the deed over to me for free.

Now this sounds like an amazing deal until I did a little research and found out that the taxes havent been paid in over 15 years and currently sit at around 27k with a tax lein attached as well. The house needs some serious repairs ie; new furnace and hvac work, new window, kitchen cabinets, and just a complete update as it hasnt been lived in in almost 16 years.

My question is that even though he is willing to give me a house for free, do the taxes and rehab costs make it worth it?

It does have a newer roof and siding, 2 bedrooms, basement, kitchen, and 1 and half baths. Its in a decent neighborhood and if I do accept I would repair and rent for a year or so before turning around and selling.

Is this something to go with or is the baggage to much to consider? Thanks for your help!
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Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
6y

@Richard Stackonis, If you plan to sell instead of hold the property as a rental, contact a local agent and get them to provide comps (comparable sales) to show what the property should be worth when its rehabbed. 

Also, look into other possible liens such as for municipal utilities (which vary place to place). Sometimes municipalities provide sewer, water, garbage, or even electricity and if unpaid bills stack up their become liens as well.

Might be easier to spend $200-300 and have a title search done to see what you are facing. 

Develop a scope of work and estimate the cost yourself or get firm estimates from contractors. 

There is work to be done to make a deal like this come together. You have to dig into it more to see if its worthwhile. 

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  • Kevin Sobilo
    Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
    6y

    @Richard Stackonis, If you plan to sell instead of hold the property as a rental, contact a local agent and get them to provide comps (comparable sales) to show what the property should be worth when its rehabbed. 

    Also, look into other possible liens such as for municipal utilities (which vary place to place). Sometimes municipalities provide sewer, water, garbage, or even electricity and if unpaid bills stack up their become liens as well.

    Might be easier to spend $200-300 and have a title search done to see what you are facing. 

    Develop a scope of work and estimate the cost yourself or get firm estimates from contractors. 

    There is work to be done to make a deal like this come together. You have to dig into it more to see if its worthwhile. 

    3Reply
  • Richard Stackonis
    OP
    Dayton, OH · Member since 2020 · 4 posts · 1 vote
    6y

    @Kevin Sobilo thanks for all the info! These were things I wasnt even aware of but its good to learn these things before I make a mistake.

    Ill be going to look at it and try and evaluate the costs of repairs this coming weekend.

    It does have a property tax lein already at 27k. Is this something I will have to pay back or can I jist make payments to avoided it being auctioned off later?

    Thanks againfoe your help!

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  • Kevin Sobilo
    Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
    6y

    @Richard Stackonis, paying on back taxes will vary from state to state. In my state they do allow payment plans, but I think once you default on a payment plan you aren't permitted to enter into another payment plan. It may differ in your state. If you have a law office do a title search they should be able to guide you there.

    You can also use the calculators here on bigger pockets to see if this deal makes financial sense. They are pretty good. 

    0Reply
  • Richard Stackonis
    OP
    Dayton, OH · Member since 2020 · 4 posts · 1 vote
    6y

    @Kevin Sobilo appreciate the info! Ill look into it and see what my options are! Thank you!

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  • Sean Smith
    Member since 2020 · 3 posts · 0 votes
    6y

    Treat this like any other property you'd consider purchasing. Instead of thinking about it as a $27K tax lien, think about that as the sales price. Knowing what you know about the property, would you buy it from a random seller for 27k? 

    I don't know your marital situation or life right now, but if I could, I'd move into this house and fix it up as I lived in it. Start with the most pressing issues - roof and HVAC. You don't want to live in a house with a leaky roof and you probably can't live in a house without HVAC. In the northern states you'll freeze to death, in the southern states you'll be miserable. Really dive into what has to be done vs. what you'd like done. Do your cabinets need to be replaced or can do they just need new doors? Those aren't too expensive. Just because windows are single pane doesn't mean they need to be replaced. 

    Ask for a reduction in the tax lien. Get together a large lump sum and submit an offer. Your state may reject that offer, but they may not. The IRS negotiates with people - you never know until you ask. 

    Lastly, this is a business deal. Don't force it. 

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