Here is what I know so far:
Medicaid has a lien on the house for $40,000 and is making her sell it.
She owns the house outright and hasn’t lived in the house for about 4 years
Last year they did buy a new stove, dishwasher and furnace (not sure why)
The mom wants the house sold fast and wants about $12,000 extra cash for herself.
The house:
Is a 2 bedroom, 1 bath
lot size of about 9,000 sqft
house is about 800 Sqft
Has a lot of deferred maintenance
They are nervous about doing an inspection, which makes me suspicious
The house next door is on the market for $215,000, but is a 3 bedroom 2 bath.
So here is my plan:
I take out a loan for 40,000 and buy the house (not sure if Medicaid will let them sell it for below market value)
I then refinance the house and pull out a second mortgage or a line of credit of about 100,000. I use that money to pay off my original loan, give the mom $12,000 and use the rest to fix up the house, since no one has lived there for about 4 years.
Depending on the numbers I would either flip the house or hold it as a rental.
Any thoughts on the plan or problems you see arising during the process? I know very little about liens.
