Potential Short Sale in Memphis?

[Ben Roberts]

I need some help thinking through this potential deal.  The seller must sell as she's moving out of town, 3/2 in Memphis, TN (Near Park and Highland, for those familiar)

Current balance on the mortgage is $72K, the monthly payment is $673

Fully renovated homes, within a block or two, are listed at $70k-$75k. Rents in the area are around $900/mo.

The house needs work.  I haven't seen the interior but based on what the seller has told me, it needs a kitchen floor and the ceiling is in place but needs to be textured.  The hardwood floors need to refinished, base boards missing in some rooms, paint throughout but major systems (heat/air/pluming/elect.) all in working order.

She has already talked to the bank about a short sale and they have sent her an application, but they did not discuss a number and there is obviously no guarantee that the bank will accept the offer.   She is behind on payments but has a payment plan with the bank and will be caught up by January.

Assuming the house has been accurately described, and knowing the tenant personally, I think we're talking about $10,000 to $15,000 worth of work to get it rent ready. I know this is a big assumption.

Even still, I think a fair price for the home is around $40,000.  What's the likelihood of the bank even considering that?

I don't think there's much here to work with as a wholesale deal but If I could get the property and the work done cheap enough, I think this makes sense as a buy and hold for me.  The margin is too thin to even consider sub2.  I think my next step is to reach out to a contractor friend of mine for a detailed estimate. Then try to find a hard money lender.   I could refer her to an agent that has done short sales but then she's likely end up selling to an investor anyway, right?  What am I not considering here?