Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Greeting to my fellow Fools. I am new posting here, however I have been reading the site forever. I have recently begun investing in Tax Lien Certificates, and concur with my colleagues that they are a worthwhile investment if one can conduct the painstaking and proper due diligence. Otherwise you set yourself up for quick failure.   With that said, could one of the more seasoned investors please tell me whether I can borrow against a tax lien certificate. (use it as collateral). I have heard three scenarios, and am wondering which are correct. The 3 scenarios are: 
1)      One may use the tax lien certificate (lets say with a face value of $1,000) to borrow x percentage (say 60%) of the value. That is I could borrow $600 at the going market rate by using the $1,000 certificate as collateral, thus leveraging my $1,000 investment into $1,600 of working capital.

2)      One may use the tax lien certificate (again lets say with a face value of $1,000) to borrow x percentage (say 60%) of the value OF THE PROPERTY. That is, if I buy a $1,000 tax lien on a property who’s value is appraised at $200,000 I could borrow $120,000 on my $1,000 investment (assuming 60%). This seems more than a bit wrong, but if it’s true then please let me know. Yay leverage.

3)      One may not use tax lien certificates as collateral. Ever.   Your responses would be greatly appreciated. Thanks!
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.