How to make an offer on a tax delinquent property?

[Alvaro Rodriguez]

Found a person who has a house worth $200k, he has 50% equity and is behind $20k in taxes.

Shortly they will take his home and I know for a fact he won’t be able to pay any taxes anymore.

How can I structure a deal where I can create a win win situation for both of us where he can walk away with some money, and I can buy his property before the banks takes it.

I was thinking about offering $150k

$100k to pay off the loan

$20k to pay off the tax debt

$30k so he can start again somewhere else

Any feedback is appreciated

Thank you

[Don Konipol]

@Alvaro Rodriguez

Option 2 is he could get a tax loan from any of a number of lenders. Texas allows these loans to pay property taxes and the lender takes the position of the taxing authorities, so this loan is ahead of any mortgage, making it a very safe loan for the lender.

The only two ways your scenario would work is either (1) the homeowner is very unknowledgeable and has no contacts who are knowledgeable (2) the equity in the property is much less than you think. Often, there are additional liens, judgements, and encumbrances on the property that the home owner hasn’t disclosed or is himself not aware of. Btw, after 40+ years as a real estate investor, having seen many, many investors both succeed and fail, I can tell you that a strategy that relies on taking advantage of the lack of knowledge of the unsophisticated segment of the home owner population is NOT sustainable.