How to structure this tax lien deal?

[Austin Wood]

Here's my situation. I have a seller who has 49k in tax liens, owes 22k on the mortgage and 12k of that is arrearages. The ARV is 85k-90k and it needs approximately 10k in repairs. What are some viable strategies to do here?

[Michael Temple]

@Austin Wood That sounds like a pretty thin deal with a lot of work to put it together. I had a similar deal I uncovered last year where the owner had a first mortgage of 55K on a 70K house with a lot of back taxes and extensive repairs. The owner had not paid on the taxes or mortgage for years but the bank didn't foreclose. It was in this weird quasi ownership stake I couldn't quite figure out.

I decided to walk away since I couldn't accurately determine repairs or how to sort through all the institutions that had a claim on it. Now in retrospect and after learning a few more things I might have offered to buy the house from the owner for $1,000 contingent on being able to negotiate the mortgage and tax bills down, which if successful I would have paid, but all of that would have been further contingent on being able to get into the place and estimate the repairs.

While I didn't do that particular deal I did some preliminary exploration with the lender and county treasurer and it seemed that it would very difficult and take months to resolve everything with a high risk of failure. I figured there were easier deals to be had elsewhere. Personally I would want to see a bit more upside to invest the time it would take to potentially get a deal like this. I would want to be getting a beat up house in a great neighborhood with 75-100K upside potential after repairs. Otherwise you might spend a ton of time and not get very much.