First, you have to put yourself in the shoes of a potential investor.

If I were in your shoes, this is what I would do:Check with the local laws regarding your rights as a landlord.

If you were in my shoes, how would you proceed?

If I were in the OP's shoes, I would ask my wife to educate her friend about the true value instead of trying to make a buck off her.

That being said if I was in your shoes i'd assume somewhere around 35k-45k.

Putting myself in the shoes of the bank on the 80%, I would have the feeling that your priority is paying back the 20% loan, not my loan.  

The requirements are VERY specific by statute, but if done right, the lender steps into the shoes of the taxing authorities. 

As the representative for the tenant, I oversaw a remarkable six-month renovation project on a 15,000SF project that revitalized the property from an uninhabitable church to a stunning showcase car dealership.

What would you do if you were in my shoes?

I welcome the opportunity to showcase their horrible business practices and hopefully make sure no one else has this experience.