Last Updated on August 29, 2025
Table of contents
- Turning Tax Lien and Deed Investing Into a Business
- Inspect the Property and Its Occupants
- Evaluate Sales and Set a Budget
- Why Location Matters?
- Perform Due Diligence on Taxes and Liens
- Handle Maintenance and Insurance
- Check Title and Parcel Details
- Manage Your Records and Organization
- Continue Learning and Seek Guidance
- Frequently Asked Questions (FAQ)
- Final Thoughts
Turning Tax Lien and Deed Investing Into a Business
Tax lien and tax deed investing isn’t a hobby; it’s a real business. You’re covering delinquent property taxes or bidding on a tax deed to earn interest and, in some cases, take ownership of the property. This type of real estate investing can provide strong returns, but success depends on planning and organization.
Handle this like a business. Set clear goals and a budget. Remember that the rules are different in each state. For example, in Texas, owners who are behind on taxes can get back a homestead or farm property within two years. Other types of properties in Texas can be reclaimed in 180 days.
Inspect the Property and Its Occupants
- Before you buy a tax deed or lien, go to the property. Check if someone is living there or if it is empty. If people live there, you may need to talk to them before you take over the property. It is often easier to take over if the house is empty.
- Checking the property’s condition helps you avoid surprises like safety issues, structural damage, or other problems. Do not buy a property without looking at it first, and always check the local rules.
- When you meet the owner or person living in the house, be kind and polite. Being friendly can help negotiations go better. But remember, this is a business deal. Stay careful and professional.
Evaluate Sales and Set a Budget
Compare the property with other homes for sale in the same neighbourhood to estimate its value. Researching comparable sales helps you decide whether the lien or deed is worth your time.
Don’t let emotions drive your decisions. Use a “maximum bid” strategy: determine the most you’re willing to pay and never exceed it. This disciplined approach protects you from overbidding and eroding your profit.
Why Location Matters?
Location affects both purchase price and resale value. Buyers aim to purchase tax deed properties at 10–30 cents on the dollar and later sell them for a profit. Property values vary widely across counties; what seems cheap in one area might be expensive in another. Therefore, research the county’s economic conditions and pay attention to property values in cities like Los Angeles (where 10 cents on the dollar could still be $70,000–$100,000).
Perform Due Diligence on Taxes and Liens
Always add up the overdue taxes. If the unpaid taxes are more than the property is worth, it is not a good deal. Look at county records to see if there are other liens, like a mortgage, IRS debt, or utility bills, and find out which lien is most important.
In some states, you must pay all the unpaid taxes from past years before you can start a foreclosure. You can’t foreclose if you only pay part of the taxes owed. This rule stops investors from taking the property without paying all the taxes.
Doing your research also means learning the local laws and redemption periods. Some states sell tax lien certificates, while others sell tax deeds.
In tax lien states, you own a certificate and earn interest while the owner pays back the taxes. In tax deed states, you bid on the property deed itself.
State laws decide interest rates, redemption periods, and the steps for foreclosure. For example, interest rates can be very different: Illinois lets investors earn up to 36%, while Arizona has a limit of 16%. By studying ahead, you can avoid surprises and match your strategy to the rules in each state.
Sample tax lien interest rates by state
| State | Max interest rate | Highlights |
| Illinois | Up to 36% | Highest rate among states |
| Iowa | Flat 24% | Predictable returns |
| Maryland | Up to 20% | Regular sales, solid returns |
| Florida | Up to 18% | Large online auctions |
| Arizona | Up to 16% | Competitive online auctions |
Handle Maintenance and Insurance
Once you’ve purchased the property (through foreclosure or deed purchase), basic maintenance is important.
- Cutting the grass prevents code violations and new maintenance liens.
- Turn off the water to avoid accidental flooding and repair any leaks. Flooding can cause serious damage and unexpected costs.
- Obtain insurance if the previous owner didn’t have coverage; this protects against disasters such as fire, vandalism or extreme weather.
Check Title and Parcel Details
Before hiring an attorney, order a tax title service or title search to confirm there are no hidden claims. Title services can reveal outstanding mortgages, unpaid utility bills or other encumbrances. Investors often use apps like LandGlide to verify the parcel number and ensure they’re bidding on the correct property.
Manage Your Records and Organization
Organization is important to success. Track bids, redemption periods, contact information and legal deadlines. Keep digital and physical folders for each property. According to the original blog, investors with high levels of organization are often the most successful.
Consider creating a spreadsheet or using specialized software to manage your portfolio. Without a system, it’s easy to miss payment dates, redemption deadlines or opportunities to increase returns.
Continue Learning and Seek Guidance
Tax lien and deed investing needs special knowledge. The rules can change over time. You should join learning programs, watch local auctions, and talk to people who have experience. It is important to understand local laws and how auctions work. Getting help from a coach or mentor can make it easier to learn and help you avoid expensive mistakes.
Frequently Asked Questions (FAQ)
A tax lien certificate gives the investor the right to collect unpaid taxes plus interest. If the owner redeems the property within the redemption period, you receive your money back with interest.
A tax deed sale transfers ownership of the property to the highest bidder. In deed states, investors often aim to buy properties at low prices and resell them for profit.
Yes. Visiting or at least researching the property helps you avoid investing in places with code violations or structural issues. You should also know whether the house is occupied and check its condition.
Research states and counties. Some states offer higher interest rates (like Illinois at 36%), while others have shorter redemption periods. Location matters because property values vary widely. Also, consider whether you want to deal with foreclosures (tax deeds) or prefer to earn interest (tax liens).
You may have to pay back taxes, penalties, title search fees, attorney fees and property maintenance. In Texas, for example, redeemers must pay a premium of 25% in the first year or 50% in the second year when they redeem the property. Always calculate these costs before you bid.
Not always. Redemption periods range from 6 months to several years, depending on the state. Some counties require you to pay all outstanding taxes before you can foreclose. Check local laws and be patient.
Final Thoughts
Tax lien and deed investing can be profitable if you treat it like a business. By inspecting properties, setting a clear budget, performing due diligence, maintaining your investments and continuing to learn, you increase your chances of success.
Remember that laws differ across states, especially redemption periods and interest rates, so always research local regulations. With discipline and careful planning, tax lien and deed investments can provide a rewarding addition to your real estate portfolio.
If you want to broaden your knowledge about Tax Lien and Deed Investing, don’t hesitate to dive more into our programs. We’re here to help!
Talk soon,
Dustin
