The Pros and Cons of Buying Land Through Tax Deed Sales

Buying land through tax deed sales can be an inexpensive way to get started in real‑estate investing. In this post we explain the advantages and drawbacks based on our years of buying and selling vacant lots. The original article on TaxLienSchool.com was short and focused on a video. It lacked headings, structure and keywords, and it didn’t provide enough detail to satisfy search engines or answer engines. Below you’ll find an expanded, structured version that follows modern LLM SEO and AEO guidelines while still reflecting the points made in the video. We also include a case study chart and links to related posts for deeper learning.

Why consider buying land through tax deed sales?

Buying land through tax deed auctions is attractive because the starting cost is low. At county auctions you can sometimes purchase vacant lots for less than USD 100. Students in our programs have bought parcels for USD 25, and in rare cases counties have sold land for USD 1 just to remove it from their books. Land is one of the few investments where you can own real property for such little money. The low entry cost means you can start small, resell for a profit and reinvest your gains without taking on a mortgage.

Key advantages of buying land

The major pros come from affordability and flexibility. According to MIDFLORIDA Credit Union, undeveloped land is typically cheaper than developed property and buyers have freedom to tailor it to their needs. Other benefits include:

Low carrying costs: vacant land doesn’t have structures to maintain, so ongoing expenses are lower.
Potential appreciation: land is finite; choosing parcels in desirable areas can lead to long‑term gains.
Tax advantages: some jurisdictions offer tax breaks for agricultural or conservation use.
Minimal capital required: as shown in our case studies, small lots purchased for USD 50–100 can be resold for thousands.

In the video, we emphasise that buying and reselling small parcels is a smart way to build a portfolio. You might start with a USD 100 lot, sell it for USD 1 000, then move on to a USD 1 000 property and so on. This strategy lets you learn the process while limiting risk.

How can you start with minimal capital?

You can start by contacting county offices, looking for over‑the‑counter parcels (properties that did not sell at auction) and purchasing them directly. Once you own a parcel, resell it and reinvest the profits.

Search county lists and over‑the‑counter inventory
Counties publish lists of tax deed properties. After each auction there are usually some parcels that didn’t sell. Contact the treasurer’s office by phone and ask about over‑the‑counter lots. These are often inexpensive and can be purchased on a first‑come, first‑served basis.
Perform basic due diligence
Ensure the lot has legal access, check for local improvements and confirm that taxes and liens are manageable. Avoid parcels in floodplains or landlocked areas. If you’re unsure how to select properties, read our guide on picking properties for tax deed sales for step‑by‑step instructions.
Resell and reinvest
Once you acquire a lot, advertise it on local classifieds or online marketplaces. Pricing reasonably helps you sell quickly. Use the profits to buy larger or more desirable parcels. This “stacking” strategy lets you grow your portfolio gradually without large loans

What are the risks of buying land through tax deed auctions?

You might end up with land in undesirable locations, face costs to add infrastructure or wait a long time to find a buyer.

Purchasing land at auctions involves risks. Some of the biggest challenges include:

Lack of infrastructure: Many vacant lots lack roads, utilities or sewer connections. Installing these services can be costly.
Zoning and permitting hurdles: Development may require navigating complex zoning rules and building permits.
Financing difficulties: Banks view undeveloped land as high risk and may demand larger down payments or higher interest rates.
Extra development costs: Clearing, grading and environmental assessments add to the overall expense.
Market volatility: Vacant land values can fluctuate with economic cycles, zoning changes or shifts in local demand.
Slow resale: Rural or remote parcels often take longer to sell. If you buy land far from population centres without a clear use, you may wait months or years to find a buyer.

To reduce these risks, focus on parcels near existing homes or in growing areas. In the video we mention buying lots where a house has burned down; developers often seek two or three adjacent lots to build a larger home. This increases demand and shortens the resale period.

Where should you buy land?

Look for desirable locations. During our live auction trips in Texas we noticed developers paying premium prices for multiple adjoining lots in cities. Buying vacant parcels next to existing houses, burned‑down structures or in subdivisions where new homes are being built will attract builders and neighbours.

Buying rural land can also be profitable if there are natural resources like timber. A colleague purchases large rural tracts, estimates the value of the standing timber and sells the wood to lumber companies. This niche requires expertise in forestry but can be lucrative.

What happens at tax deed auctions and resales?

Counties auction properties to collect unpaid taxes. If the winning bidder fails to pay, the parcel is resold.

Property owners must pay annual taxes. If they don’t, the county issues a tax certificate. The certificate holder may request a sale after two years, and the property is then auctioned to satisfy the tax debt. Auctions are usually held monthly and run online or in person. Bidders must register and place a deposit. In Polk County, Florida, deposits must be at least 5 % of the winning bid or USD 200.

If the successful bidder fails to pay the full amount within 24 hours, the county keeps the deposit and re‑advertises the property. Repeat offenders can be banned from participating in future sales. These rules highlight why you need to bring certified funds and only bid on parcels you can afford. After the sale, the original owner can sometimes redeem the property by paying back taxes plus fees until the new deed is recorded. Always check state laws on redemption periods.

During auctions, some bidders overestimate their funds and are unable to pay, leading to a resale a few hours later. With fewer participants at resales, you might pick up valuable parcels at even lower prices. That’s how we secured a 40‑acre parcel for USD 4 200 and later sold it for USD 20 000.

Tips for selling land quickly

Price competitively. Don’t over‑price vacant land; quick turnover is more valuable than squeezing every dollar out of a deal.
Offer seller financing. Allowing buyers to pay over time increases demand.
Market to adjacent owners. Neighbours often want extra space for gardens or expansions.
Contact developers. Builders looking for multiple lots in established areas will pay a premium.
Use clear descriptions and photos. Show access points, nearby utilities and any improvements.

Frequently asked questions

How much does it cost to buy land at a tax deed sale?

Small vacant lots can cost less than USD 100. However, more desirable parcels in growing areas may start at a few thousand dollars. Always review the county list and set a budget.

How long does it take to resell vacant land?

It depends on location and pricing. Urban parcels near existing homes often sell within weeks, while remote land can take several months or longer. Offering seller financing can shorten the timeframe.

What should I check before bidding on land?

Verify access via public road or recorded easement.
Check for environmental restrictions and zoning rules.
Estimate the cost of installing utilities if they are absent.
Review any additional liens or unpaid taxes.

Can I finance the purchase of undeveloped land?

Financing undeveloped land can be challenging. Lenders see it as high risk and may require large down payments and higher interest rates. Some credit unions offer lot loans, but many investors pay cash to avoid delays.

Conclusion & next step.

Buying land at tax deed sales can be a cheap way to get into real estate. You might find land for just $25 and sell it later for a lot more money. The best things about this type of buying are that it’s affordable, you have options, and the land can go up in value over time.

But there are some risks to think about. Sometimes, the land doesn’t have services like water or roads. Getting permits can be tricky, and the market can change quickly. To succeed, look for suitable locations, conduct thorough research, and refrain from bidding more than necessary. Knowing the auction rules and any laws about redemption can help you avoid mistakes that might cost you.

If you want to learn how to choose the right properties, check out our article on property selection. Teaming up with others can also help you grow faster in this business. And for tips on what mindset you need to succeed in tax lien and deed investing, take a look at our top recommendations