The Stonefield Tax Lien Fund

Tax Lien Fund 2017-02-09T23:27:34+00:00

Investing in tax liens, directly or through a tax lien fund, offers the following benefits:

  • Exceptionally Low Risk
  • Relatively Short Duration
  • Substantially Above Market Returns

Tax liens are unique in that they offer a low-risk/ high-reward investment opportunity. How? By purchasing municipally issued real estate tax liens, the investor assumes the government’s position and comes before virtually all other creditors. This provides the investor with a strong measure of financial growth and safety. Growth: Tax Liens generate interest at rates that are well above market. Safety: Each tax lien is secured by its underlying property, at a very secure ratio – i.e. tax liens represent a small fraction of the property’s value, yet they are backed by the full value of the property.

Here’s how it works:

Real estate taxes are a part of life – one that affords municipalities across the country the financial wherewithal to provide municipal services to its citizens (e.g. police, fire, education, sanitation, etc.) Here is an overview of the real estate tax lien cycle:

  1. The local municipality issues a tax bill to the property owner.
  2. If the property owner does not pay that tax bill, the municipality converts that bill into a lien (which supersedes all creditors and lenders).
  3. Being that the municipality still needs to collect those funds in order to provide uninterrupted services to its citizens, the municipality then proceeds to sell the liens to investors.
  4. To attract investors, the municipalities offer these liens at attractive interest rates, which accrue against the property and is added to the lien.
  5. After the liens are sold, the municipality still continues to handle the billing and collections of all outstanding liens – now on behalf of the investors.
  6. The property owner then has up to 24-months to payoff the lien with all its accrued interest

Although the overall process is very simple and straightforward, it does require a lot of administrative processing as each lien needs to be researched, bid for, purchased, recorded with the municipality, monitored, and redeemed. It is therefore important that you understand the process very well, or that you work with a fund that has extensive experience managing the tax lien life cycle.

Tax Liens are a true Win-Win-Win Scenario:

By purchasing municipally issued tax liens, everyone in the process benefits:

  • The municipality wins by being able to provide uninterrupted services to its citizens
  • The homeowner wins, by being afforded an additional 24-months to pay his/her taxes, and
  • The investor wins, by earning a substantially above market return, with exceptionally low risk, over a relatively short duration