PreForeclosure, $40k equity, 6k arrears, significant repairs

[Sean Dezoysa]

Hi, I have a preforclosure that I found via door knocking. Here are the details:

ARV ~$143k
Principal balance: $102,100 1st, no 2nd.
$875 payment which includes PITI, fixed rate.
3 other houses on the block are for rent, all the same size or a little larger. All 3 are renting for $1,200/month.

Repairs
The entire neighborhood has defects and is suing the builder. This house has an upstairs bath that flooded and collapsed the downstairs laundry room ceiling. Outside and living room lights both have problems, probably faulty wiring. Windows don't appear to be right (her words). There should be 2 heaters/AC units, but there is only 1 to heat the whole house (4/3 2,040 sf 2 story house built 2002)

I am thinking of taking over the loan. But the issue is it is not rent-ready due to the repairs. Are there other options? Or can I negotiate creative terms with a tenant to overlook the repairs, or make repairs, for a discount?