Tax lien on the secondary market - Posted by Ben

Posted by John Behle on January 19, 1999 at 16:20:11:

Somehow I must have overlooked your message. Occasionally my computer locks up and I lose some messages that I had set aside to answer. When I come back to the forum, they are marked in red and I don’t always notice I haven’t replied.

There is not enough information to calculate the investor’s yield. I would need to know when the one payment of 4000 was made and when the subsequent 19 payments began. Provide that information and I can give you a yield.

Tax lien on the secondary market - Posted by Ben

Posted by Ben on January 13, 1999 at 19:31:48:


This may be somewhat complicated but I am considering
purchasing a tax lien which was purchased in December
1993 for $2000.00 and is earning 9% simple interest.
Since then, over the past five years, the lienholder has made one payment of 4,000.00 and 19 subsequent tax payments of $1000.00 per quarter in quarterly installments.Each payment earns 18% simple interest. Now the lienholder wants to sell the lien. Principal plus interest (face value)is about $40,000.
First of all, what is his yield if he gets paid face value?
Obviously, going forward I am not getting interest on the accrued interest, so I want to discount it accordingly. Let’s say I would like to make
at least 15%, what should my offer be? (Forget for the moment that I can also pay subsequent taxes and earn 18%
for future payments). Can you help me structure this?
Many thanks, Ben