Duplex with Lien on it

[Katherine Roberts]

What are the risks/benefits of buying a home with multiple liens on it? Total of about $75k.

They’re asking too much but if I can get it at a good price it should cash flow between 400-600$ a month depending on the interest rate. It’s a duplex in a nice,  growing area. It seems to be in good shape, but it needs a new roof. The seller has agreed to a credit for it.

The owner also wants to remain as a tenant for a year, which makes me nervous since he hasn’t paid taxes. Advice on letting him stay?

[Eliott Elias]

You should not purchase a home with an existing lien on it. Purchase via a title company and make sure all liens are cleared to convey clear title.

[Nicholas L.]

@Katherine Roberts

just to address one aspect in your post - you're saying "it would cash flow if I could buy it for way less than what the sellers are asking."

well........... that applies to tons of properties.  so - doesn't sound like a deal to me.  next!

[David M.]

@Katherine Roberts

None really, especially if you need to find a "good price..."

Unless you are doing something "creative..." you'd take Title the property 'free and clear.'  So, those liens will be paid off at closing.  Again, without something creative, you'll need to offer at least what is owed against the property.

Yes, if this owner is "wacked up enough" and the property is free and clear, perhaps you can get away with offering the current owner $75k and nothing or several grand.  You never know what some of these people will take.  And, you'd get a property really cheap..

Depending on your area's landlord/tenant laws and unless you are really able to handle it, I wouldn't do the leaseback unless he had some sort of REALLY good excuse...

Hope that helps.  Be happy to chat.  Good luck.

[Katherine Roberts]

Quote from @Nicholas L.:

@Katherine Roberts

just to address one aspect in your post - you're saying "it would cash flow if I could buy it for way less than what the sellers are asking."

well........... that applies to tons of properties.  so - doesn't sound like a deal to me.  next!

 I figured it would be a good experience to put an offer on it, even if they say no. I didn’t know if the lien would make them more willing to accept a lower offer? I don’t think our numbers are too far off.

[Nicholas L.]

if it's already on the MLS it's unlikely they'll take a lowball offer. but you can of course try.

[Eliott Elias]

You should not purchase a home with an existing lien on it. Purchase via a title company and make sure all liens are cleared to convey clear title.

[Dan H.]

I agree with @Eliott Elias about purchasing with liens.  We use title companies to ensure our purchases do not have leans.  

What do you think the chances that a where who has not paid property taxes would meet my tenant criteria?   I suspect it approaches 0%.   What do you think their credit score is?   I think rent back to some owners is OK, but not an owner that is behind on their property taxes.  If they have not always paid their property, what do you think the odds are that they pay their rent every month?  I would think the odds of them paying rent very month is too low for them to be able to be my tenant. 

Between both of these, I suspect you will be better off selecting a different property.  

Good luck

[Oleksandr Ivanovskiy]

@Katherine Roberts

Liens have to be cleared. So you need to understand what are you getting yourself in. Basically clearly understand how much you need to pay off the liens and how long it will take.