Fluid Capital Solutions strives to invest in a cross-section of real estate, agriculture and technology.
A tax lien certificate is a negotiable instrument created by a taxing authority when a property owner fails to pay their property taxes. The tax lien certificates are sold by counties and municipalities at public auction or through a negotiated sale in order to monetize their delinquent real estate taxes and obtain cash to help fund many crucial government programs and services. In exchange, the county places a lien on the property and interest accrues to the lien holder. The tax certificate is a first priority lien, superior to mortgages and all judgments except those of the United States government.
Tax liens are unique in that they provide relatively high returns with low risk. By purchasing municipally issued real estate tax liens, the lien holder assumes the government’s position and comes before virtually all other creditors. This provides the lien holder with a strong measure of financial growth and safety.
Each tax lien certificate is secured by its underlying property, because taxes amount to only a small fraction of property value, owners and related lenders have significant motivation to redeem tax lien certificates rather than lose their assets. When the tax lien certificate is redeemed, the lien holder receives the principal invested plus a fixed rate of return ranging from 10-25% interest per year. Approximately 98% of all tax lien certificates are paid off (redeemed) within three years of being issued. Although it’s rare for a property owner to forfeit their real estate, in the event that the a tax lien certificate is not redeemed by the property owner and/or related lenders, the Part lien holder will then seek title to real property through tax deed foreclosure proceedings and sell the property. This usually requires an additional capital investment by the lien holder.
As a result of the benefits of investing in tax lien certificates, we have developed tax lien funds sometimes referred to as “income” funds, designed for the needs of income-oriented investors, demanding the safety and security of their principal while seeking targeted double-digit returns and diversification. These funds will concentrate on purchasing pools of tax lien certificates sold by counties and municipalities in order to monetize their delinquent real estate taxes and obtain cash, which help fund many crucial government programs and services. The tax lien certificate represents a senior secured position in the underlying real property, superior to all mortgages and other nongovernmental liens. When a tax lien certificate is redeemed, the fund (lien holder) receives the principal invested plus interest.
Over the last two centuries, most of the world’s wealth has have been created from investing in real estate. For the average investor, real estate offers the best way to develop significant wealth. Real estate provides an important alternative investment vehicle that diversifies their overall portfolio and comprises one of only two asset classes that have consistently outperformed inflation over time.
For the average small investor, owning an office building, a local shopping center, a warehouse, or even an apartment complex is not a realistic possibility. However, private investment vehicles or real estate funds allow smaller investors to participate in the commercial marketplace by buying a fractional interest in those property types, without the hassle of daily management responsibilities, personal liability for mortgage payments or other carrying costs, while providing great potential for a passive income.
Although there are many sectors within the commercial real estate market, our primary focus is to fund the development of assisted living and self-storage facilities by pooling capital through our own sponsored private funds for the purpose of capturing capital appreciation and generating stable and predictable cash flow. Because these sectors do not correlate strongly with any specific economic environment, nor do they depend heavily on a rising real estate market, we believe our funds have the potential to outperform other asset classes regardless of short-term trends in the national economy or in the real estate market generally.