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Tax Lien Investing
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How Profitable is Your Tax Lien Investing?by Joanne Musa Send Feedback to Joanne Musa Investing in tax lien certificatesMore Details about Investing in tax lien certificates here.
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To calculate how profitable you are, take all the interest and penalties that are due both on the certificate amount and on any subsequent taxes paid. Add to this your original investment (the certificate amount) plus any subsequent taxes paid plus any expenses that are reimbursed upon redemption of the tax lien certificate. This is the total amount that you would be paid if your tax lien certificate redeemed. Subtract your total investment from this number. Your total investment is what you paid for your tax lien certificate plus any subsequent taxes that you paid plus any reimbursable expenses and non-reimbursable expenses related to your lien. This is your profit. Once you have your profit you can calculate the yield, or percent yield for each of your tax lien certificates. To do this, divide the profit by your total investment. If you want to convert this to an annual yield, you need to know how many days the lien was held for. Multiply the yield by 365 (the number of days in a year) and divide by the number of days that you held the certificate.
For instance if your profit was $360 on a tax lien that you held for 90 days and your total investment was $3600, your yield would be 10% and your annualized yield would be .10* 365 / 90 = .4055 or 40.5 %. You’ll need to do this for each tax lien in your portfolio. Then if you want to, you can get an average yield or annual yield for your entire portfolio.
Since every state is different the calculations for penalties and interest will differ for each state and you will need a different spreadsheet or software for each state that you invest in. If you invest in the state of New Jersey there is software available that has all of this built in. It’s called Tax Lien Manager, and it does much more that calculate the profitability of your tax lien portfolio. Tax Lien Manager will also calculate how much premium you can pay for tax liens and still be profitable and with Tax Lien Manager you can import detailed tax sale lists from LienSource. Tax Lien Manager also provides you with all contact data for New Jersey (tax collectors and county clerks) and pre-printed forms and letters to use in your tax lien investing.
Joanne Musa works with investors who want to reap the rewards of investing in profitable tax lien certificates and tax deeds. Her tax lien investing articles appear all over the Internet. Tax Lien Lady’s Member’s Area is designed to help you navigate though the steps to building a profitable portfolio of tax liens or tax deeds. With 3 full courses, dozens of videos, and monthly webinar training, you’ll quickly move forward on your journey to tax lien investing success! Join us at www.TaxLienLady.com/Membership.htm
Keywords: tax lien certificates, tax lien investing, tax lien software, investing in tax lien certificates, tax sales This article has been viewed 333 time(s).
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