The next step for these home owners is foreclosure, so your pitch to them should be that you can help them prevent foreclosure and save their credit.Best of luck!

But I heard that the banks will not appraise that extra square footage, which would prevent buyers from purchasing.  

How would you guys have handled this differently and what tips do you have to prevent things like pig surprises from happening?

My purchase deal is scheduled to close in a couple weeks and I am contemplating how to best flip the lot.I am buying it for $13,500 (paying $10k cash to seller + paid seller's back taxes and court costs) to prevent it from going to Constable's tax auction. 

Why risk your home over something preventable? 

If you restrict yourself to only using the money you have in your pockets, then you have a limited supply of money, which not only prevents you from doing deals, but also gives you a slower growth rate in your business (how fast do you want to get out of your career?).  

*How about a shorter hold period with the idea that once the leverage is lost the investment is sold and the process repeated.The other thing about an indefinite hold period is that like you mentioned once the property is finally sold they will deal with a huge taxable amount that could have been prevented with a shorter period.  

Send your hvac guy there for the 6 month or annual cleaning, bill that back to the investor (as a PM, I"m not paying for preventive inspections) and you'll be getting 2 visits a year (one by you and one by the hvac guy) to the house - thats enough.If an investor wants more, then fine, you come up with a fee for that to cover it.

It prevents wasting their time as well!

We have found that a change in our procedure has prevented alot of these problems.