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Investing/Strategies / Tax Lien Certificates

URL:  http://boards.fool.com/thanks-much-roger-let-me-chew-on-this-and-think-25065121.aspx

Subject:  Re: TLCs as the RE market drops Date:  1/20/2007  6:31 PM
Author:  psuasskicker6 Number:  44 of 52

Thanks much Roger. Let me chew on this and think things through a bit more as well. I'm examining a lot of things right now and this is just one of many options for new areas to start investing in. If/when I start getting into it in more detail, I'll definitely reach back out. It's nice knowing there's someone out there as a resource.

One thing sort of struck me...
One option you may wish to consider is buying the certicates/liens in the secondhand/aftermarket. This would be like buying from people who bought at auction and are looking to get out.

There's been talk of funds that I've seen, in terms of why no one does "tax lien funds" cause it shaves the margins to the point that the risk:reward isn't worth it. But it does seem a bit surprising that there isn't a business built around this sort of thing. For instance:
Say I get a tax lien for $10k @ whatever interest to be paid over 10 years @ $2k per year. That stream has an NPV of $14,720 @ 6%, but it's a $20k cash flow net. It seems surprising that there isn't anyone out there buying up this lien and immediately trying to flip it for $12k.

Is there a market for this sort of flipping? Seems like it'd be a good play to get into...

- C -
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