Advice Needed on Deal

[Matthew Foucheaux]

Father-in-law is being foreclosed on by the bank.  In addition to the bank lien he has a second lien on the property from his ex-wife for $25k.  I don't know what to do about that second lien from the ex-wife. He claims there is no justification for the second lien and only found out about it when he tried to sell the home a year ago (hence why he stopped making payments on the home, figured he'd foreclose on the home and get back at her in someway).

Here are some basic details:

• Mortgage pay off is $235k
• 1 year owed in arrears
• ARV on the home is $330k. Repairs/upgrades about $50,000 to hit the ARV.
• Rents in the area are between $2300 - $2500 per month.  Repairs about $5000 to get rent ready.

He has moved out of the home.  He'd like to see if this could be a deal for my wife and I.  I'm looking for ideas on what we might do here.  Would a subject-to deal work here?  I just don't know how that second loan factors into the equation.

We are buy and hold investors and don't necessarily want to flip but wouldn't be adverse to it.