I just deposited another check from a tax lien redemption today!

Sometimes I get so excited about what I’m going to do with the money from a tax lien redemption that I forget to make a copy of the check before I deposit it to show you the proof. But that’s not real proof anyway. The real proof of how much I made from tax lien investing is the 1099 forms that I get in January of the following year. That’s because the 1099 forms show not how much money I get back from the county or municipality, but how much interest I’ve made.

This check was for a little over $1500, but if you’re interested in seeing the breakdown of just how much I really made, since most of that money was money that I invested in the first place, here’s the breakdown from my tax lien software program:

The original amount of the lien was $426.94, won at 15% on October 25, 2011, so it was only half for almost 7 months. On the original amount I made $38.42 in interest and $8.42 in penalties.

Then I made a subsequent tax payment of $1034.93 on April 5, 2012 which accrued at 8% and since it redeemed just a little more than month later I made only $12.88.

And of course I also got back my recording cost of $40.00 and a $12.00 search fee – which is standard in New Jersey.

So I got blended return of 4.78% in less than a year, but most of that money was held for less than 2 months. Not a killing, but I would not be able to do that securely anywhere else, certainly not in banks Money Market account! And I could have done much better had I only not procrastinated and paid the subsequent tax payments in November instead of waiting until May! This is a case where I should have done what I tell my students to do.