Sunday, January 13, 2008

Foreclosures, tax liens risky as investment alternatives

Janet Kidd writes:

Worried about stocks, some investors are putting their retirement money into something they're convinced will be plentiful in 2008: foreclosures and tax liens.

Using self-directed individual retirement accounts, investors are buying depressed real estate, making loans to private companies and buying up tax lien certificates on properties, which give the investors a government-determined yield that the homeowner pays to release the lien. If the homeowner doesn't do that within a prescribed time period, the investor receives the property.

A handful of firms specialize in helping clients make alternative investments in their IRAs, but industry players say it's still a tiny fraction of the overall IRA market.

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