Suggestions for a 3rd notice of taxes due?? - Posted by adam from Indy

Posted by adam on October 05, 2001 at 17:07:15:

I agree with teaching her and helping her but in this case time is of the essence. As for putting 20k in my pocket, I really doubt I’ll be selling it for the appraised value. In fact, I don’t know what her markets are like at all as I’m living in Indiana and she’s in Texas. I figured I’d be making about 10k the same as she would, but I would be taking all the risks. I also planned to split any other profits with her, but only after I sold the house and knew what my total costs would be. I’m really just looking for other practical suggestions for someone who is looking at a 3rd notice for taxes due, although I know that the reality of the situation is that she can’t afford the place anyway. Thanks again for the response.

Adam in Indy

Suggestions for a 3rd notice of taxes due?? - Posted by adam from Indy

Posted by adam from Indy on October 04, 2001 at 20:37:37:

Ok, here’s the situation.

One of my good friends from long ago lives in the grand state of Texas and has run into some really bad luck. She’s always been financially dependent upon a husband who recently divorced her. She is sitting in a house appraised at $112,000 with a current mortgage balance of $63,000. Her monthly payment is $650, but does not include any escrow of taxes and insurance. Taxes are 3k per year and insurance is $750/yr. Back taxes due amount to $6,000. She wants to stay there but I know for a fact that she absolutely can’t afford to do so. She is alone with 2 children and makes about $1,300/ month. I figured that I would offer her $80,000 for the place now, which would keep her from bankruptcy court, pay off the loan and back taxes, and put 10k in her pocket.

I love her to death but think she’s fooling herself into believing she can keep the place. I could then sale the place for a quick profit of 20k or so.

I would love to have some feedback if anyone has a better idea. I simply want to find the best win-win situation for everyone involved.

Thanks again for any help.

Re: Suggestions for a 3rd notice of taxes due?? - Posted by Ronald * Starr

Posted by Ronald * Starr on October 05, 2001 at 20:15:22:

Adam in Indianapolis--------------

I’m not very excited about your proposed structure. Sort of looks like taking advantage of a friend to me.

There are several different ways she could help herself, and perhaps you could help her do it.

It sounds as though she is two years behind on her taxes. Has there been a foreclosure on the delinquent taxes yet? If so, when was the tax deed recorded? For a homesteaded property there is a two year right of redemption after the tax deed is recorded. The redemption price is high–25% during the first 6 months, 50% thereafter.

If the right of redemption is expiring soon, she would be well advised to sell the property right away and take the equity to work with in a rental or less expensiver house. There is ever an book on how to sell your home yourself in five days. You could refer her to it.

She might try to trade her house for a smaller or less expensive house. She might get the new owners to take on the burden of the delinquent taxes.

Is she not getting any child or spousal support from the exhusband? If she is entitled to some, she should go after it with an attorney. Encourage her to do, loan her money for the attorney if possible.

Could she rent out a room in the house for added income and use that to pay the taxes? OR share the house with some other mother who would contribute money?

Could she get another job to increase her income? Tough, having the children. But losing the house for back taxes is even tougher. Needs not be even half time time probably. If necessary, perhaps she could find a couple of other mothers with whom she could share mutual childcare chores.

Could she get her employer to increase the salary she makes.

Is she getting food stamps? If now, has she checked to see if she is eligible for food stamps? This might take some pressure off of her.

Is she a member of a church? Often, when asked, other church members or the leader of the church will help out a fellow member of the congregation by loaning money to pay the taxes. And perhaps offer parttime work to repay the loan.

I suggest that you pass on to her these suggestions and counsel her to do whatever is necessary to help her get through this tough time.

Good Investing and Good Helping**Ron Starr

Re: Suggestions for a 3rd notice of taxes due?? - Posted by Kristine-CA

Posted by Kristine-CA on October 04, 2001 at 21:25:45:

Dear Adam: I hope the experienced investors/cre minds have a good idea here, but I am wondering how 10K in her pocket and 20K in yours is a win-win. I know you have to do the work to make a deal happen but…The woman needs a place to live and she has decent equity in a home AND she has a friend who knows how to spot deals and knows how to get her 20K more. If she is a good friend, I say teach her/help her get her equity out of her home and put it towards something in her price range.

Lots of otherwise smart and hard-working people just need to be shown some of the possibilities. Maybe this is one of those service situations…

Just my two cents. Sincerely, Kristine