When a deed conversion is the exit, what did the lien actually cost to carry to that point?
A deal worth studying: 80 certificates bought at a blended 2.1% bid rate across two Indiana counties, statutory rate 10%, holding period 26 months on the ones that redeemed. The eleven that did not redeem converted to deeds on parcels assessed at an average of $14,000. Carrying costs from the conversion date forward, attorney fees, title search, county recording fees, property taxes that continued to accrue, basic maintenance to avoid municipal citations, ate roughly $2,200 per parcel before any disposition attempt. The fund deck modeled deed conversions at zero carrying cost because it modeled them as rare. They were not rare, they were 14% of the block, and that single assumption is what turned an 8% projected net return into a 5.1% actual. The statutory rate was not the problem. The unmodeled cost of owning something nobody wants is the problem. What fraction of your target fund's conversion estimate is based on historical deed rates in the specific counties they're buying, versus a portfolio-level assumption borrowed from a different state's auction dynamics?
