Last Updated on December 8, 2025
11 Tax Deed Investing Mistakes to Avoid if You Want to Profit Big
Thinking about jumping into tax deed investing? It’s one of the best ways to get real estate for pennies on the dollar, but only if you avoid some costly rookie mistakes.
Hi, I’m Dustin Hahn, and after years of teaching and investing in tax deeds across the country, I’ve seen what works and what can seriously mess you up. In this guide, I’ll walk you through the most common tax deed investing mistakes and how to avoid them.
Table of contents
- 11 Tax Deed Investing Mistakes to Avoid if You Want to Profit Big
- Tax Deed Mistake #1: Ignoring Clouded Title Issues
- Tax Deed Mistake #2: Overlooking City or County Liens
- Tax Deed Mistake #3: Misunderstanding Redemption Periods
- Tax Deed Mistake #4: Buying Homestead-Exempt Properties
- Tax Deed Mistake #5: Ignoring Environmental Hazards
- Tax Deed Mistake #6: Missing Additional Unpaid Taxes
- Tax Deed Mistake #7: Relying on Google Street View
- Tax Deed Mistake #8: Overbidding Without an Exit Strategy
- Tax Deed Mistake #9: Buying Land in the Middle of Nowhere
- Tax Deed Mistake #10: Travelling for a Tiny Auction
- Tax Deed Mistake #11: Using Third-Party Property Lists
- Want Hands-On Help? Join Us at a Live Auction
- Final Step: Take Action
What Is a Tax Deed Sale?
Let’s start with the basics. In a tax deed state, you’re bidding on actual ownership of the property, not just a lien. Opening bids often start at the back taxes owed, and the mortgage gets wiped out because tax liens take priority.
Example:
Property market value: $100,000
Unpaid mortgage: $50,000
Back taxes owed: $5,000
Winning bid: $10,000
➡️ You now own the property, mortgage-free.
Tax Deed Mistake #1: Ignoring Clouded Title Issues
Don’t assume the title is clean just because it’s a tax deed. Make sure the county sent proper legal notifications to everyone on the title chain. If they didn’t, the sale could be reversed, and you could be left empty-handed.
Tax Deed Mistake #2: Overlooking City or County Liens
While tax deed sales wipe out mortgages, they often don’t wipe out municipal liens. Watch out for:
- Grass mowing liens
- Trash removal
- Demolition or code enforcement fines
These can add up to tens of thousands of dollars and stay attached to the property even after you buy it.
Tax Deed Mistake #3: Misunderstanding Redemption Periods
Some states (like Texas) have a 6-month redemption period, meaning the previous owner can still reclaim the property after you “win” it, by reimbursing you plus interest.
Tax Deed Mistake #4: Buying Homestead-Exempt Properties
Properties with homestead exemptions or other special protections can be tricky. Redemption rules may be different, or the sale might be reversed. Double-check the property’s exemption status before you invest.
Tax Deed Mistake #5: Ignoring Environmental Hazards
Steer clear of properties that were formerly:
- Gas stations
- Auto body shops
- Dry cleaners
These could have soil contamination issues, which may cost more to clean up than the property’s worth.
Tax Deed Mistake #6: Missing Additional Unpaid Taxes
Winning a tax deed doesn’t always mean you’re completely current. Some properties have multiple years of unpaid taxes, and you could be on the hook for them. Always confirm the full tax history.
Tax Deed Mistake #7: Relying on Google Street View
Never buy a property sight unseen. Google Street View images can be years out of date. Fires, floods, or demolitions might have occurred since then. Use tools like:
- TaskRabbit
- Local photographers
- Friends or contacts in the area
Always get updated photos before bidding.
Tax Deed Mistake #8: Overbidding Without an Exit Strategy
Don’t get caught up in auction hype. Know your numbers. Have a plan.
Ask yourself:
- Will I flip this?
- Hold it for rental?
- Sell as-is?
No plan = no profit.
Tax Deed Mistake #9: Buying Land in the Middle of Nowhere
Just because it’s cheap doesn’t mean it’s a deal. Vacant desert lots or land with no access, no utilities, and no market are common traps. Focus on properties with actual demand.
Tax Deed Mistake #10: Travelling for a Tiny Auction
If you’re flying out to an auction, make it count. Some investors show up with a short list of 10 properties, only to find all of them redeemed. Instead:
- Travel for big auctions (like Houston, TX)
- Start with a list of 100+
- Expect only 15–20 properties to make it to auction day
Tax Deed Mistake #11: Using Third-Party Property Lists
Buying pre-made auction lists may sound easy, but they’re often outdated or incomplete. Always get your list directly from the county. It’s worth the extra step.
Want Hands-On Help? Join Us at a Live Auction
Unlike typical seminars, we take students to real auctions. You’ll learn:
- How to inspect properties
- How to research a title
- How to bid with confidence
- And how to avoid all these mistakes
We host trips in Texas, Florida, and Philly, and they sell out fast.
Book a call to learn more
Learn by doing. Not just sitting in a seminar.
Many beginners skip proper research on the property. They bid without checking the land use, access, title issues, or local rules. A quick review of county records, maps, and past sales helps you avoid buying something that brings extra costs later.
Always check parcel maps, GIS tools, and county planning departments. Some land looks good on the list but is landlocked. If you cannot legally reach the property, selling or using it becomes hard.
Yes. Many tax deed properties have been ignored by the owner for years, so unpaid fines, unsafe structures, or building issues can show up. A quick call to the city or county code office can save you from taking on a long list of repairs.
No. Tax deed sales are usually final. Once you place the winning bid, you’re responsible for paying and accepting the property as is. This is why preparing before the sale matters.
Yes, but some insurers require a quiet title action or a holding period. This depends on the state and county. Ask a local real estate attorney about the quickest path.
Final Step: Take Action
If you’re serious about getting started, here’s what you can do today:
- Call the county treasurer’s office.
- Ask when their next tax deed sale is.
- Request the current list or ask if there are OTC (over-the-counter) properties.
Then… start digging. You’ve got this.
