Subject 2 or Short Sale Help

[Cody DeLong]

Currently in an interesting situation. I'm a buy and hold investor and a deal came across my desk. A lady owns a single family property she bought for cash and took a $52k HELOC out on in 2006, owes $42k on the HELOC and stopped paying in June 2018. The house is worth fixed up, $40k max! However the kicker is in this town, the 4 BR houses go for $950 a month rent, no utilities included. So as you can see the cashflow is there.

The owner says that only cosmetics need to be done when she closed it up in June and the renter left. The current HELOC is $380 a month, she currently owes $3800 in back payments, taxes, and interest.

What I'm curious is this, Assuming it needs $10k in cosmetics and such to get someone in there. Am I better off doing Subject 2 or trying to get a short sale? Since it's a HELOC does this work differently? Thoughts?