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Lien Baron, LLC Announces Formation of $10mm Tax Lien Investment Fund
Lien Baron, LLC has formed the first private equity fund to invest in tax liens and tax deeds across the United States. Lien Baron Fund I, LLC will have an initial capitalization of $10 million.
Lien Baron Tax Lien Fund is a private equity fund that seeks to maximize investor returns through identifying and acquiring tax liens and tax deeds around the country. Specifically targeted will be tax liens on properties with a high probability of foreclosure. We believe that tax lien sales represent a secure and profitable way to maximize the rate of return for our investors. With a resourceful and experienced management team, this business model offers a safe and easy way to maximize investors’ rate of return. The fund’s target is to provide investors with a per annum return in the range of 25-30%. The fund will be made up of 200 units to be purchased by investors for $25,000 each, bringing the total size of the fund to $5,000,000.
Through studies of the local economy, governing municipality, and other contributing characteristics, the profitability of individual properties on which tax liens may be acquired will be assessed. In particular, studies will be done to decide whether the property has a high probability of defaulting on the lien, allowing the certificate holders to actuate foreclosure. After studying contributing factors to the profitability of different properties, the Managing Member will attend tax sales across the United States and purchase tax lien certificates and tax deeds, particularly focusing on the purchase of certificates that will likely lead to foreclosure of the property. In cases of foreclosure, Lien Baron acquires the property on which the lien was owned, and can sell the home for spectacular profits. If foreclosure does not occur, then the interest rate on the loan is collected, which may be up to 25% per year or higher.
The current housing market will provide the optimal setting for tax lien investments. The fallout of the sub-prime market makes tax liens even more lucrative for a few reasons:
• There is less equity in peoples’ homes for them to pull out for investment opportunities, there are fewer individuals with capital available to purchase tax lien certificates, so there is less competition now than in the past.
• The majority of sub-prime loans done in the past several years did not have escrow accounts set up to pay for increasing property taxes. This means that more properties are behind on property taxes in this market than previously.
• Mortgage lenders have been securitizing many loans, selling off pieces of the debts to many different investors. Because of this, mortgage lenders are having a hard time proving who really owns the note, and will generally not get notice of the liens, preventing them from redeeming the debt.
-Tax liens are not subject to the up and down trends of the stock market and interest rates. Tax lien interest rates are mandated by each state, so the return on investment is stable and backed by real estate.
“Lien Baron has differentiated itself from other private equity firms and individual investors in our approach to purchasing liens. Our focus is to purchase liens that will result in the ability of us being able to obtain title to the property through foreclosure”
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Lien Baron has purchased hundreds of thousands of dollars worth of tax liens over the past few years.