Need Advice on a flip

[John Gagliano]

I have an opportunity to buy a house which is going into foreclosure. I did my survey and CMA; the house has a present value of $70K and needs $40K in repairs. After the work is done the ARV of the house should be in the $139K range which would give me a profit of around $25K (I am estimating 4K in closing and silent costs). Here is the problem- the owner owes $89K and the house is worth 70K. On top of that the house is not very habitable as a rental because the owner let the house get run down. The question is how do I structure the deal to make it work out for all parties? A "subject to" will not work because the value is up side down, or can it work some how? Can I do a "subject to" to get control of the house and then do a short sale? Or just do a short sale? Or????? I am looking for that creative solution, who has it? And thanks for the input!!