Non-performing note NPN - Deal Eval

[Mark Gallagher]

Would love if some well-educated note investors could chime in on this note scenario due to a large open child support lien. I am not a well-educated note investor, but I have purchased a NPN before and run it through foreclosure, mainly for learning. I'd like to get deeper into the space, and this is one I have been watching for a bit. I've pulled a BPO and a title search, and here are the findings:

Currently occupied, presumably by owner. Value of the subject in average condition is $40,000. 

Owner purchased the property 5/1985

Husband was added to the deed 7/2013

Open Mortgage 1 (note for sale) 11/1996 for $39,600

-was assigned 5/2005 to Chase, assigned 11/2011 to current seller

Open Mortgage 2 3/1999 for $5,902

Open Judgement 1 9/2004 for $3,459 (store credit)

Open Judgement 2 2/2008 - foreclosure proceedings by Chase

Open Judgement 3 - child support against husband for $75,370

Open Taxes 2015 - $1517

Open Taxes 2016 - $2073

My concerns are as follows: First and foremost how do I know this child support lien is in fact the same person? Second, this lien would be extinguished via foreclosure but that means reperformance is not really possible because it would be reperforming with a massive lien that's double the value of the home. An exit strategy of deed in lieu of foreclosure, and then putting the home back solely in the wife's name seems like an option? Or simply do a deed in lieu of foreclosure and wholesale the property, but they've been there for a long time and likely won't give it up easily, and would need a large amount of cash for keys to get out. 

The note is for sale for $15,000. Thanks in advance for your input! 

[Christopher Winkler]

Take that $40,000.00 value with a grain of salt. Have you seen it or had a broker drive by to see what kind of shape is it in? Does it need light, medium, or heavy rehab? You need to look at these you target for foreclsoure like you look at buying any property. Avoid 2 bedrooms, busy streets, near rail road tracks, commercial neighbors, etc. How is the roof, structure of the building and any other problems you can see? How many bedrooms? 

We learned to stay away from anything with a value under $70,000.00 & 2 bedrooms, and if you have to foreclose in a judicial state which I believe PA is, it will take over a year and +/- $5,000.00. By the time you get title, you either rehab it yourself and keep for a rental or try to sell. 2 Bdrs are slow movers. Or if you try to sell to a rehabber, you won't get much more than you put into it. You will also have to factor in forced place insurance, note servicing, and document scrub/board fees which start adding up.

You really need to be paying under $10,000.00 for notes on these lower priced homes, which we now avoid like the plague. Good luck & let us know how it goes.