Last Updated on September 8, 2025
Texas and Georgia—what makes them different? They aren’t classified as lien states, nor are they deed states. Instead, they are often referred to as The Hybrid States.
So, what does that mean for investors?
Every February we review our progress on our New Year goals. If you’ve fallen off the wagon, now is the perfect moment to re‑engage. Staying consistent with your investing plan is critical; in our experience, the people who stick with tax liens and deeds eventually hit life‑changing deals.
What Is a Tax Lien State?
A tax lien state sells the delinquent tax bill, not the property. Investors pay the overdue taxes, and in return the property owner must repay the debt plus a statutory interest rate. If they fail to redeem, you may foreclose on the property. Redemption periods vary by state; for example, some states offer 6–24 month redemption windows with penalties that can reach 18–24% per year. Because the lien amount is often a small fraction of the property’s value, investors can sometimes foreclose and acquire a house for pennies on the dollar.
What Is a Tax Deed State?
A tax deed state sells the actual property at auction. When the county has waited multiple years (often two to five) and still hasn’t been paid, it lists the property for sale. The opening bid usually equals the total of outstanding taxes plus court and notice costs. If you win the auction, you receive the deed and full ownership. There is generally no redemption period, though bidders must pay promptly. Because these auctions can involve older arrears, the starting bids may be higher than lien certificates but still far below market value.
How Are Texas and Georgia Different From Traditional States?
Hybrid states, sometimes called redeemable deed states, blend the two systems. You buy the deed and take ownership right away, but the previous owner retains a limited right to redeem the property. In return, you earn a significant penalty on your money if redemption occurs.
- Texas: Non‑homestead properties have a redemption window of six months. If the owner redeems within this period, they must pay you the amount you paid at auction plus a 25% penalty. For homesteads, agricultural land or mineral interests, redemption can extend to two years with penalties increasing to 50% in the second year.
- Georgia: The redemption period is twelve months, and the owner must pay back the purchase price plus a 20% premium during the first year. After the first year, the premium increases by 10% each year.
These short redemption windows allow you either to acquire the property quickly or to receive a significant return on your capital.
Comparing Lien, Deed and Hybrid States
| Sale type | Redemption period | Investor return (approx.) |
| Tax lien (certificate) | Usually 6–36 months | Statutory interest rate (e.g., 8–24% per annum) |
| Tax deed | None (full ownership upon sale) | Immediate control; no guaranteed return if sold |
| Hybrid (redeemable deed) | Texas: 6 months (non‑homestead) to 24 months (homestead/agriculture); Georgia: 12 months | Penalty: 25% in TX (first year), 20% in GA (first year) |
How Does a Hybrid Auction Work in Practice?
- Attend the auction. In Texas, auctions occur on the first Tuesday of each month. Georgia counties hold sales periodically, often once a month. Research the auction list and inspect properties in person before bidding.
- Bid on properties. Suppose a home is worth US$100,000 and you win the auction at US$10,000. You must pay that amount immediately and record your deed.
- Take possession. Because you own the property, you can legally rent it out while waiting out the redemption period. We’ve often collected rent on day one after a purchase.
- Wait for the redemption period. If the previous owner redeems, they pay you the purchase price plus the penalty (25% in Texas, 20% in Georgia). If they fail to redeem within the specified period, you keep the property free and clear.
Why Do Hybrid States Offer Attractive Returns?
- Dual upside: You earn either a property at a deep discount or a high fixed penalty.
- Short timelines: Texas redemption periods are as short as six months; Georgia’s is one year. Compare that with the multi‑year redemption periods in some lien states.
- High penalties: 25%–50% penalties in Texas and 20% in Georgia are often higher than interest rates offered elsewhere.
Case Studies From Our Experience
- Small deal, big spread: We once purchased a US$100,000 house where the total taxes owed were only US$3,000. After paying additional fees and a small foreclosure cost, our total outlay was around US$5,000. The property did not redeem, and we sold it for more than US$90,000, netting an enormous profit.
- Renting during redemption: In Texas we bought a property for US$10,000 that already had a tenant. Within days we began collecting rent of roughly US$780 per month. Whether the owner redeems or not, we receive either the penalty plus rent or the property outright.
- Big win examples: Students have scored impressive deals: an $800,000 property (a gas station with a car wash) for $55,000, and another purchased a $500,000 house for $32,000. These are exceptional outcomes, but they illustrate what persistence and due diligence can achieve.
When Are Hybrid State Auctions Held?
- Texas: Most counties hold auctions on the first Tuesday of every month. The county posts the list of delinquent properties, and you must be present with certified funds.
- Georgia: Auctions typically occur monthly but check the county tax commissioner’s website. In both states, redemption periods start on the date the deed is recorded.
How Can You Minimise Risk?
- Inspect before bidding. Visit properties in person to check for structural problems, liens and neighbourhood issues. Our article on how to pick the right properties provides a step‑by‑step guide.
- Understand redemption rules. Know the exact timelines and penalties. Our table above summarises key differences, and you can verify them in the Texas Property Code and Georgia statutes.
- Set a strict budget. Don’t chase bids. Focus on properties where your total investment (purchase price plus fees) leaves enough margin for profits.
- Diversify your portfolio. Spread your capital across multiple auctions rather than betting everything on one property.
Frequently Asked Questions
You must wait until the redemption period expires. In Texas, that’s at least six months for non‑homestead property; in Georgia, it’s one year. Selling before the period ends is difficult because buyers are wary of redemption.
Yes. Counties require certified funds on the day of the sale. Some also require proof of your ability to pay before bidding.
You receive your bid amount plus the statutory penalty (25% in Texas or 20% in Georgia). That penalty is not prorated in Texas; you receive the full 25% even if they redeem after just two weeks.
Hybrid state investing helps you mix owning a tax deed with the chance to make good money from a lien. If you stick to a clear plan, like looking into properties, knowing the rules about redemption, and keeping an eye on your budget, you can create a profitable collection of investments.
If you want to learn how to find and check out the right properties, check out our guide on choosing properties for tax deed sales. It’s also important to have the right attitude. You can find tips on the qualities you need to keep yourself motivated on our site. Are you ready to start? Look at our auction calendar for upcoming sales, or book a free call with us for some personalized help. If you want to learn more, download our free mini-course. It has simple steps and examples to follow. Remember, we can help you get started, but it’s up to you to take the next step!
