Seller Underwater - How to Rescue?

[Robert Haworth]

How do I buy the following house the right way?

End-unit twin in Phoenixville, PA 19460 was on-market in Spring 2013 for $139.5K in challenged condition. Sat for 260+ days, moving on and off. Believe seller got tired of showings that never led to acceptable offers b/c he is upside-down on it as it sits. Owner owes $130K on the (first and only) note but doesn’t want to short it, likely due to expected impact on his credit. He also cannot bring more than token money to the settlement table.

ARV is $170-175K, repair est. $32K. Calculated my initial offer at the time at $91K and MAO at $105K.

He and his family lived there for years, then moved many miles away in Su 2012 leaving one college-aged daughter to contend w/broken-down KTN, peeling paint, broken plaster, bad floors, missing interior doorknobs. I think we can assume some emotional investment.

House is spacious and fits my rehab and rental criteria nicely. It is currently off-mkt again, and has been for some months (his frustrated agent walked off the job).

QUESTION:How can I help solve Owner's problem? Can I offer him money over time? I can't put in a tenant right away b/c house can't get U&O permit until the bulk of the $32K in repairs is performed (3 mos.). However, if owner would agree to defer accepting money from me (except for the L/O fee up front) until I had it ready, that may work. Don't want to become his "rehab partner" and divide the profit b/c there's not a lot there, AND it would involve selling the prop to some 3rd party, but I want to keep it.

Suggestions? Does he have no alt. to a short?

[James Sinclair]

I really don't quite understand the motivation for the deal. The owner has a 130K loan which he can't reduce. The property needs 32K of work. I seems to me 130K plus 32k plus holding cost during the rehab would put you at ARV. Why not just buy a property at retail and find a renter right away instead of this deal?