To invest or not to invest?

[Pete Castor]

I'm a realtor who has invested in flips and fixer uppers for decent profit in the past. Recently, I've been considering tax lien investing. Here's the scenario:

I'm looking at a house that is a short-sale in my county, on the market for 800+ days. Home was last purchased in 2007 for $287K; short-sale price is $190K; assessed value is $202K. In digging a little deeper, I learned that the outstanding mortgage is $140K, and there is a state tax lien of $1280 and a federal tax lien of almost $48K (which is why they haven't budged on price in years I'm sure). The house is now unoccupied and winterized. It's somewhat dated and needs new HVAC but is otherwise in pretty decent condition. I'm comfortable that the comps would support a FMV of $260-270K with a $30K rehab investment.

I know the federal tax lien has first priority and I can't buy that one. So, that trumps my state tax lien, were I to try to grab that. And the bank's long term, shortsale position seems to indicate they won't take much (if any) less than $190K?

So, what to do? Invest in the state tax lien and wait to see? Pay full (or close) short sale price for the property as another flip and maybe clear $20-30K after expenses? Walk away and keep looking for the next investment?

Your wisdom and insight is appreciated.