Tax Lien Investment Calculator

Tax liens offer state-statutory interest rates with senior position to mortgage liens.

Lien amount

Statutory rate %

Bid down rate %

Redemption months

Redemption probability %

Expected return

$765

Annualized yield %

0.12%

Redemption amount

$5,900

How the math works

Return = lien × bid rate × (months/12). Expected = return × redemption probability.

$5k × 12% × (18/12) = $900 × 85% = $765 expected return = 12% annualized yield.

How to Use

Enter lien amount.
Enter statutory rate %.
Enter bid down rate %.
Enter redemption months.
Enter redemption probability %.
Read expected return.

Frequently Asked Questions

Tax lien fundamentals?

States with tax lien: ~30 states. Top yields: NJ 18%, AZ 16%, FL 18%, IA 24%, AL 12%, GA 20%. Bid-down systems: bidder accepts lower rate to win, often 1–8%. Premium bid: bidder pays more than lien for redemption right. Redemption period: 6 months to 4+ years state-dependent. Foreclosure: if borrower doesn't redeem, investor gets property. Risk: due diligence (encumbrances, environmental, occupied, paid liens). Best for: cash-positive investors with patience for redemption process.

How does this debt analysis fit a workout strategy?

Workout, default, and recapitalization decisions depend on the gap between in-place debt and current asset value. Lenders evaluate cure cost, foreclosure timeline + cost, broker price opinion (BPO), and borrower equity. Borrowers evaluate equity in the property, refinance feasibility, and forbearance economics. This calculator provides one input to that multi-factor decision.

Discounted payoff (DPO) vs forbearance vs deed in lieu?

DPO: lender accepts less than full balance to avoid foreclosure cost, common with non-recourse and underwater assets. Forbearance: payment deferral 6–18 months, balance accrues, useful when value will recover. Deed in lieu: borrower transfers title to lender, faster than foreclosure but lender takes full risk. DPO often best when borrower has new capital + lender wants quick exit.

Special servicing dynamics?

CMBS loans transfer to special servicer at default or maturity default. Special servicer compensation aligns with workout, but timeline is 6–24 months and fees stack ($25–250k+ in costs). Whole-loan and balance-sheet lenders move faster but with less flexibility. Bridge and debt fund lenders most flexible. Time-to-resolution and total friction cost should be weighted in any borrower scenario.