BRRRR on a property with a Tax Lien

[Jason Kaye]

I came across a property that is for sale at a very good price. It is steeply discounted because of back taxes owed on the property. I believe that there could be a BRRRR opportunity in this situation and wanted to see if my theory has any legs.

Property Details

Purchase price: 44k

Back Taxes: 58k

ARV: 120k

My general idea is to purchase the property all cash so that there is no seasoning requirement for the refinance. I will then negotiate a payment plan with the county for the back taxes. After getting on a payment plan, I would cash out refinance the property.

Assuming that the property appraised at 120k and I refi'd at 75 ltv, I could pull out 90k, recouping my initial investment plus some.

Am I missing something in my understanding that would prevent this from being a viable option?

Am I missing any underlying assumptions?

[Blair Poelman]

Is the 58k property taxes, or some other kind of lien? Like an IRS lien maybe?  I can't recall ever seeing a 120k property with 58k in back taxes.  I would check the title report before moving much further.

Also you should get pretty familiar with the tax foreclosure rules and procedures in whatever municipality or county the property is in.  Not saying it's a bad idea - but something seems out of whack with that tax amount and the value - seems like the property should have been either sold at a tax sale or repo'd by the county long before getting that far delinquent