Dave Says

Thursday, December 13, 2007 at 2:20am

Dear Dave,

My father owns a lot in town and recently received a notice that there is a property tax lien against it. Are any of the penalties associated with this lien negotiable?

Also, someone was telling me that individuals can actually invest in tax liens. Is this true?

— Louis

Dear Louis,

I’ve never heard of a municipality negotiating those liens, so I’d have to say probably not. If you think about it, they really have no reason to do that. Sooner or later someone will be willing to come and pay that amount when the municipality seizes that land and auctions it off.

With regard to investing in tax liens, it’s true that in some states you can invest in them. Certificates are issued that investors can purchase, and if your father had a tax lien on a lot they would issue a certificate on the tax lien instead of selling the property. An investor can buy the tax certificate, and will become the owner of the property in a year or two if the tax debtor doesn’t pay off the certificate holder.

Now, if the tax debtor wants to keep the property, they have to pay the certificate holder the amount owed plus interest — which is where the investing part comes into play. In some states, the interest can be as high as 10 to 12 percent.

I don’t fuss with that type of investment because the return is just not worth the hassles associated with them. Trying to make sure you have a clean title to a property and finding one you really want is like searching for a needle in a haystack. Plus, lots of the interest and questions regarding the subject of investing in real estate tax liens are generated by those questionable late-night real estate guys selling tapes.

Can it be done? Sure, but to me it’s just way too much trouble for such marginal returns.

— Dave

Dear Dave,

Is it advisable to buy a pre-arranged or pre-paid funeral?

— Jane

Dear Jane,

There’s nothing wrong with pre-arranged funerals. A pre-arranged funeral just means that you’ve made all the plans ahead of time. This way, your family knows if you want the upscale mahogany casket or the budget model, where you want to be buried and things like that. Basically, it’s just shopping around and making decisions in advance.

But I would never pre-PAY a funeral. On average, funerals increase in cost by about five or six percent a year. You can make more than that on your money by investing wisely.

If you prepay your funeral instead of investing that money, you’re losing about five to 10 percent each year. So, if you prepay an $8,000 funeral, it’s costing you about $400-800 per year of lost interest. The funeral home gets the benefit of using your money instead of you!

Now, this is supposing you invest wisely. If you have all of your money tied up in Certificates of Deposit earning two percent a year, then you would come out ahead pre-paying your funeral because the yearly increases in costs outweigh your savings.

But I hope you’re seeing a better return on your investments than two percent. You certainly should be!

— Dave

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Filed under: City Business
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By: yourfuneralguy on 12/31/69 at 6:00

Dave, Your advice is correct.Do not pay for any type of funeral insurance. This is the the AARP's position and any honest funeral Director's position.yourfuneralguy, R.Brian BurkhardtFuneral Director