$100k + in equity, or not?

Good day,

Yes it is, as a matter of fact. Unless I’m still half-asleep when this deal crossed my desk this AM. You be the judge, and I’d appreciate your input and any suggestions (ethical suggestions) on how to handle this very “possible” deal.

The names have been changed to protect the innocent.

Setting the scene…mid-Michigan

The homeowner: exactly x 2 the actress who played Danny DiVito’s scary Mom in “Throw Momma From the Train”. OOOWWEENN! Plus she has a serious drinking problem so catching her sober is like trying to thread a needle. She is paranoid about being taken advantage of & anything with legal documents she just about has a panic attack.

Bev (not her real name) lives on 10 acres out in the boonies. She’s over 3 years behind on her prop taxes. The house is a real dump and she’s a real battle-axe. 12 rooms and she get only gets around in 3 of them - including the bathroom I’m told. She’s one of those compulsive pack-rats you’ve only heard or read about so she’s collected nothing but crap for six years.
It also has a couple of so-so size barns and I have zero idea what they even look like. Haven’t even seen the property for that matter. But as soon as it crossed my desk this AM i knew exactly who and where that was.

The SEV for the prop is slightly over $200k.
She owes slightly under $20k in back taxes, 3 yrs behind…and counting.
She’s pleaded “hardship” back earlier this yr I find out and apparently has been granted a 1 year extension so we’re looking at an early spring 2008 b4 this thing goes to tax sale. I’m only guessing.

I know nothing about the hardship laws (county? State?) and how many times she can keep re-submitting her hardship paperwork to get another extension to stay there?

Where do I find that info out?

Did my calculator just read $180,000.00 in equity to play with or did I punch in to many zero’s…again?

Would you run?

or would you walk?

Anyone with experience or suggestions in this matter? Do I just skip shaving this AM, jump in my car and hustle on over there and get a signature? And face the wrath of Danny DiVitos mom? Thats the part that I’m uneasy about.

What do I wear in case she throws something at me?

I know nothing about tax sales or hardship homeowners. First time I’ve run across something like this but it got my attention.

Someone point me in the right direction.

Much Obliged

Does she own the property free and clear of any mortgages?

She should be to sale already for her 2004 taxes, however, if she got an extention, then I am not sure how long they will extend for.

Might I ask what city in Mid-Michigan?

This is covert information right now, sorry. I will tell you it’s outside a city of approx 15,000, and it’s in the eastern time zone. Hopefully that won’t narrow it down to much or we might bump into each other at the courthouse :deal.

Where do I get the answers I’m looking for?

Go look up the deed recordings to see if there is a mortgage on the property.

The real question is how you should approach her. I wouldn’t just show up out of the blue, from what you have written about her. Try calling or sending a letter asking if she would consider meeting with you.

slondeau- Sorry I forgot to answer your question in my previous post. Yes they own it free and clear. I’m not sure of any liens - yet.

But assuming, just assuming there is no liens on the prop, does your palms get kind of sweaty when a great deal like this crosses your desk? I’m by no means a grizzled veteran in the RE investing arena but I couldn’t help but get a little bit excited about this. More than one zero really threw me a curve on my calculater.
I know I don’t want to get my hopes up but at least I have a smidgen of a chance by already knowing them personally so I at least have that going for me out of the gate and hopefully we can put a deal together that satisfies her so the state doesn’t confiscate her home and kick her to the curb.

It’s a good friend of mine’s friends ex so getting together with him and dropping in on her is actually an option provided she hasn’t cracked the bottle yet that day.

Is she asking you to buy the property?
Sorry if I missed it but how much does she want for it? 180k in equity means nothing to you if she wants 200k.

I have often found that sellers even w/o the help of alcohol are very flakey. If she is looking to sell try to find out what she wants/needs. Many of these people will contact nearly every investor, realtor or lawyer who contacts them to try and find the most money they can. I have personally in the last year dealt with two homeowners who had already signed contracts with other investors and had other liens attached to the property. Do a title search at the county court house.

I would approach this very carefully and do your due diligence. If all looks well make your best pitch. What is your exit strategy?

Thanks for the advice.

No she has no idea…of anything. She’s 3yrs behind in taxes. She’s just existing completely oblivious to her situation. She has never said anything about leaving because she doesn’t believe she’s going anywhere.

In other words, she’s living an illusion I’m afraid.

My job is to try to expalin to her what her options are because if she keeps going down the same road she’s on for another 6 months she won’t have a house to live in because of back taxes.

What does she want to do? I have zero clue until I speak with her in the next week or so hopefully. But if I can get her to at least understand the circumstances she’s in and offer her some solutions on how I can help her out of her bind.

My exit strategy is up in the air at the moment until I can decipher her motives. I can keep it and throw a big bash and charge $5 a head to see The Stones or something, or wholesale it to another investor. Either or. If I can tie it up for a song I’ll just hang onto it. Taxes are less than $5k yr.
Either way, scoring a $200k prop for an exceptional price of even $100k much less than for $20k - $30k is worth looking at harder.

Thank you all for your input but I’m still lookiing for the answers to my initial questions and how to go about getting them, if anyone knows.