Last Updated on August 25, 2025
Investing in Arizona tax liens can yield high returns because you effectively step in for the county and pay delinquent taxes. In return, the property owner must reimburse you plus interest — in Arizona, this can be as high as 16 % simple interest.. If the owner fails to redeem the lien within three years, the investor can foreclose and take ownership. The following guide explains the process, answers common questions and shares expert‑level tips.
Table of contents
Why Are Arizona Tax Liens Profitable?
The state runs a descending‑interest auction where bids start at 16 % and can drop to 0 %. Because interest is simple rather than compound, you know exactly what you will earn over the redemption period. If the lien is redeemed early, you still receive the principal plus accrued interest. For long‑term investors, the opportunity to foreclose after three years adds an equity upside
When Are County Tax Lien Sales Held?
Most counties hold their tax lien sale once per year, usually in February. Delinquent taxes from the prior year are auctioned. The counties publish lists of parcels with outstanding taxes at least two weeks before the sale, including owner names, assessed values and parcel numbers.. This gives investors time to research properties.
How Does the Auction Process Work?
At the auction, people try to get the best deal by offering to take lower interest rates. The highest rate accepted is 16 percent and the lowest is 0 percent. The person who offers the lowest rate wins the chance to pay the overdue taxes and fees. They need to pay all of that by 2 p.m. on the sale day. Usually, new bidders must pay with cash or certified funds. This means they need to have money ready to go when they make their bid.
What Are the Redemption Rules?
Property owners have three years from the sale date to pay off their tax lien. During this time, they can pay the taxes, penalties, and interest to get their property back. If they don’t pay by the end of the three years, the person holding the lien can start the process to take over the property. Also, investors can pay any new taxes after June 1 to keep the lien up to date and earn interest at the same rate.
How Should You Prepare for the Auction
How to Prepare for an Auctiion
- Study each county’s rules
Regulations differ by county; for example, Graham County requires bidders to register and assigns bidder numbers on the day of the sale
- Perform thorough research
Use county parcel lists, GIS maps and assessor records to evaluate property condition and market value Check for additional liens or environmental issues
- Set a target rate and budget
Decide the minimum interest rate you will accept and the maximum capital you can commit. Remember that you must pay the full amount immediately if you win
- Diversify your bids
Spread investments across several counties and property types to manage risk.
Expert Insights and Tips
- Watch Out for Fees: Don’t forget that advertising and sale fees get added to the taxes you owe.
- Don’t Think You Own It Right Away: When you get a certificate of purchase, you only have a claim on the property, not the property itself.
- Be Careful with Zero-Percent Bids: A really low interest rate can tie up your money for up to three years, and you won’t earn anything during that time.
- Check Remote Properties Carefully: Some pieces of land might not have easy access or utilities. Use maps and satellite images to see if you can reach them.
- Stay Organized: Keep a simple list or spreadsheet to track when you bought each lien, its interest rate, and when it needs to be paid back. This way, you won’t miss important deadlines.
Frequently Asked Questions
No. Many counties let people bid online, so if you live outside Arizona, you can still join in. But remember, you need to do your homework on the properties using the county information.
If the owner pays the taxes and fees during the redemption period, the county will return your principal plus any accrued interest.
Yes. Mortgage liens, IRS liens or environmental issues may exist. Always conduct a title search before bidding.
Procedures vary by county. Some require online registration; others, like Graham County, ask you to submit forms and receive a bidder number at the sale.
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Talk soon,
Dustin Hahn
Don’t forget to come back and learn more about Tax Liens and Deeds though 🙂
