I had a potential client call and ask for help. They have a Condo they bought at the top of the market for $130k. The bubble burst, he lost his job, and now the condo is vacant. They haven't paid the bank or HOA in 3 years. As it sits, it's now worth 30k-40k. It needs carpet, paint, appliances, and some small drywall & tile repairs. I told him there wasn't much I could do because it's not really worth my time negotiating with the bank & HOA for what's certain to be little profit but I told him I'd think about it. I came up with this idea:

The bank isn't foreclosing yet. The HOA probably won't foreclose because then they would on the hook for the $140k they owe the bank in PI and arrears.

My idea is this: I lease it from him with the ability to sublet and I only pay him a percentage of my proceeds when the place is rented and only after my initial costs are recouped. All of his share of the proceeds will go directly to the HOA. I'll shine the place up and furnish it. ($2k-$3k) We list it as a vacation rental. I live in an area that gets a lot of tourism & winter visitors plus we have a couple events a year that book the hotels & vacation rentals solid. In the summer, I'm estimating we can get $500-$700 a month but in the winter, $1500-$2000 a month.

I would then be able to negotiate with the HOA to short their liens and when the bank files, we'll start short sale negotiations with them.

My position & experience: I rehabbed several houses before the crash and am currently rehabbing my REO my wife and I live in. I have little of my own capital and really need the cash flow so I can get away from my awful job. I've always been very good at putting together complex, creative deals both in real estate and other industries.

Tell me what I'm missing. Thanks!

Edit: The complex is not age restricted and allows rentals.