Tax Lien Fund by cgy75863


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									CPS Tax Lien Income Fund I LLC

       Executive Summary
        November, 2010
      Email address:
          Mission Statement
CPS Tax Lien Income Fund I LLC (CTLIF)
• To generate above average rates of returns by
  investing in property tax liens throughout the
• Goal is to earn high single digit to low double
  digit returns.
• Considered by many to be lower risk
     What is a Property Tax Lien?
When a real property owner fails to pay
 property taxes the local taxing authority or
 county will issue a tax lien on that property.
 The tax lien will then be sold at auction to
 generate the tax revenue for the local
 government. If the lien is not satisfied within
 a statutory period, the owner usually has the
 right to foreclose the lien. Typically, the low
 interest rate bidder wins the Tax Lien.
 What does a property Tax Lien look like?

• CTLIF will be investing in tax liens (certificates)
  in Florida and potentially in other states
• It is only practical to invest in tax lien auctions
  that are web based (internet)
• All records are therefore web based
• Tax lien is nothing more than an “electronic
  Benefits in Tax Lien Investing
• Security-tax liens are secured by real property
• First lien-against real property-first priority
  over mortgages, HOA fees, mechanics liens
  (exception certain government liens).
• High equity position- lien represents small
  fraction of the assessed value-exception if
  there an numerous other outstanding tax liens
• Property tax lien amount due plus accrued
  interest is computed and collected by county
• Property tax lien holder can petition for a tax
  deed if the tax is unpaid
• Fixed principal-the principal and interest rate
  is fixed
• Yield is attractive compared to alternative
  fixed income investments
      Which states to invest in?
• Florida-initial concentration, excellent for
  investors; over 30 counties use web sites,
  auctions start at 18%, lowest rate bidder wins
• Arizona, California, Illinois, and Texas and
  other states offer attractive returns and web
  based auctions
• CTLIF establishes guidelines-minimum and
  maximum amounts to minimize risk
• Dollar range generally; $500 to $30,000
• Assessed values generally > 10 times lien
  certificate value
• Minimize properties with prior tax liens
             Estimated Losses
• CTLIF estimates annual losses to be in the
  range of .50% to 1.00% of the portfolio
• Losses occur from properties CTLIF chooses
  not to foreclose
• Examples of possible losses-
  – Gas station with environmental issues-
    contaminated soil
  – Property with major decline in value-hurricane or
    major decline in value (Pensacola beach)
            Estimated Losses
– Property must be investigated before petition
– All prior tax liens must be paid by petitioner
– Petition court for tax deed sale
– Place property up for sale
  Petitioner obtains title if no other bidders show
  Sell the property immediately
  Small gain or loss on your foreclosure
  Total loss if you choose not to foreclose/petition
   Competition from other investors
           is the major risk
• CTLIF considers institutional investors and
  investment companies the biggest potential
  threat who are willing to accept lower returns.
• Institutional investors may dominate auctions
  and bid interest rates to low levels thus
  adversely impacting our ability to purchase
  high yield tax liens
• Competition increased in 2010 from hedge
  funds and 12 banks (which used TARP $)
                       Recent Competition
Sample of 25 county auctions in Florida

            Average interest rate per lien
            2008       12.04%
            2009       14.11%
            2010        9.03%

Source: Polk County Tax Collector
       Other Risks Affecting Yield
Quick redemption of tax lien lowers yield-

  If you buy a 12% tax lien that is outstanding for only
  6 months your real return is 6%

  Reinvestment of idle cash is a major hurdle for CTLIF!
            Other Risks-
 Quick Redemptions Produce Idle Cash
Historical repayment of tax certificates
  First year
  First six months          31%
  Second six months         18%          49%
  Second year
  Even throughout the year               49%
  Total redemptions end of 2nd year 98%

Repayment history per Smith’s prior experience. Past redemptions are not a guarantee of future results.
          Investing Idle Cash
Secondary auctions are held by Florida counties
for Tax Liens unsold from the May/June auctions.
These are called “County Held Certificates,”
and made available for purchase at 18%. These
auctions begin in mid June and are available
throughout the year.
   The quality and quantity of secondary auctions may
   not be sufficient to keep our funds fully invested
            Investing Idle Cash
Out of state (non Florida) auctions are held
  throughout the year
CTLIF will be investing in certificates outside the
  state of Florida for diversification and to keep
  funds fully invested
                  Estimated Returns

Estimated gross returns on tax liens                          12.00% (1)

Estimated expenses and reserves:
Management fees (2)           2.25%
Trustee, legal and acct’g     0.35%
Reserves for losses           0.65%                           -3.25%

Net income                                                    8.75%
(1) Estimate from CPS Tax Lien Mgt. Actual returns will vary and may be
    materially different than the estimate.
(2) CPS Tax Lien Management, Inc. 1.50%, Campbell Asset Management 0.75%
              Estimated Returns
Registered Investment Advisors associated with CPS
  Investment Advisors through the CPAlliance program will
  be paid a management fee in accordance with their
  client’s contractual arrangement. The CPAlliance fee is
  not reflected in the previous estimated return. The
  following is an estimate of the net return to the
  CPAlliance client.

Estimated net income                   8.75%
Estimated CPAllinace fee              -0.75%
Net income to investor                 8.00%
           Estimated Returns

Disclaimer: There will be years when returns
  exceed or are less than the estimated
  projections set forth previously. Excess
  returns or losses will be added to or
  subtracted from the value in CTLIF.
      Frequently Asked Questions
1. What type of Entity?-CTLIF is an LLC and taxed as a
   partnership for federal and state income tax purposes

2. What type of Income Tax reporting? partnership K-1
   reported annually

3. What is type of taxable income? primarily “ordinary

4. Is there a minimum investment? $250,000
    Frequently Asked Questions
5. Who is eligible to invest? Accredited Investors only

6. Who are accredited investors?
   Individuals or joint with net worth of $1,000,000 or more
   Individuals (excluding spouse) who have income of
    $200,000 or more in the last two years and expect to
    have the same level of income in the current year
   Joint income (including spouse) who have income of
    $300,000 or more in the last two years and expect to
    have the same level of income in the current year
              Accredited Investors
6. Who are accredited investors………continued
   A trust with $5 million in assets
   An organization described in IRC Section 501 (c) (3) with
    $ 5 million in assets
   IRA’s qualify provided the owner meets the definition of
    an “accredited investor”
   Qualified retirement plans provided the trust is directed
    by a person knowledgeable of investments, i.e.
    Registered Investment Advisor

  Note: Potential investors should consult their own legal advisors
     Frequently Asked Questions
7. How often is income distributed?-CTLIF
   estimates it will distribute income quarterly
   based on 2% per quarter ( 8% annually).
   Distributions will begin at the end of the
   investor’s first full calendar quarter. Example:
   investor deposit funds on April 15, 2011; first income
   will paid in September, 2011.
   Investors wishing to compound their funds
   may elect not to receive income
     Frequently Asked Questions
8. How often is principal distributed?-CTLIF will
   distribute principal after the investor’s
   second full year (the normal life cycle of a tax
   lien). Investors must notify CTLIF in writing 90
   days prior to principal distribution request.
     Frequently Asked Questions
9. Who is the custodian of the funds?- National
   Advisors Trust Company, (NATC) a trust
   company in Kansas City, Mo., licensed to do
   business in all 50 states. will be the custodian
   and depository for the funds and tax liens.
   NATC will report quarterly to the investors
   their account balances. NATC has $6 billion
   in assets under management.
     Frequently Asked Questions
10. Will there be an annual audit?-Yes. CTLIF
   will employ the services an independent
   certified public accountant to examine the
   annual financial statements. A copy of the
   annual audit will be available on the website.
     Frequently Asked Questions
11. Who are the managers of CTLIF?- CTLIF will
   employ the services of CPS Tax Lien
   Management, Inc. which is owned by the
   principals of CPS Investment Advisors. CTLIF
   will also employ Campbell Asset
   Management LLC as a co-manager of the
   fund. The management teams have
   extensive experience in investing in Tax Liens.
This presentation does not represent a complete disclosure of all pertinent information.
    Investors should refer to the private placement memorandum for a complete discussion of
    all critical information before investing. This does not constitute an offer to sell nor is it a
    solicitation to buy a membership interest in the Company. The Company’s membership
    interests have not been and will not be registered under Securities Act of 1933 or the
    securities laws of any other jurisdictions and any offer of sale of the Company’s membership
    interests will be made, if at all, only by means of a private placement memorandum satisfying
    an exemption from registration under, and in compliance with, the Securities Act of 1933 and
    all other applicable securities laws.

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