Last Updated on September 9, 2025
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Taking a leap into tax lien and deed investing means moving past fear and getting involved. We sometimes wait for a safety net before we act, but success often arrives only after we step off the ledge. The way forward starts with informed risk and careful preparation.
Fear keeps many new investors from exploring tax sale opportunities. In our experience, the “parachute” – profits from liens or deeds – does not open immediately. You may have to spend time studying county rules, scouting properties and waiting for redemption periods before you see returns. Yet the potential gains make the leap worthwhile. States such as Florida allow delinquent property owners two years to redeem their taxes, while Texas gives most non‑homestead owners six months. North Carolina provides no redemption period, meaning the winning bidder receives the property outright. Understanding these differences prepares you to jump with eyes open.
What stops most people from investing in tax liens?
Uncertainty, lack of knowledge and the idea that you need a large budget prevent many beginners from participating. Learning the rules and starting small helps you overcome these barriers.
It’s normal to feel cautious before bidding at a tax sale. The process varies by state, and you may not know where to get lists or how to check properties. A good starting point is to build a list from county auction rosters and drive past properties to assess condition. Setting a budget and checking state redemption rules keep you from overpaying. Patience is vital; returns may take one to three years, and there is no quick way to make money. Consistency – such as routinely calling counties, monitoring sale lists and attending auctions – builds confidence and helps you avoid mistakes.
How do redemption periods differ by state?
| State or Example | Redemption period | Notes |
| Florida | At least 2 years | Owners have two years to redeem before a tax deed sale. Investors must wait before foreclosing. |
| Texas | 6 months for most non‑homestead properties | Short redemption period can speed up returns, but some homestead properties have longer periods. |
| North Carolina | None | The county sells the property outright. No redemption means quicker ownership transfers. |
What are tax liens and tax deeds?
A tax lien is a legal claim against property when the owner fails to pay property taxes. Investors buy these liens at auction and collect the debt plus interest, which can exceed bank returns. If the owner doesn’t pay, investors may foreclose and acquire the property. A tax deed allows the county to sell the property outright to recover unpaid taxes. Rocket Mortgage notes that tax deeds let buyers purchase homes below market value. Because some states offer no redemption period, the winning bidder can receive the property soon after the sale.
Steps for your first jump into tax sale investing
- Study state laws and redemption periods
Know how long owners have to redeem and what interest rates apply in your state.
- Build a property list
Download the county sale list, research assessed values and plot addresses so you can drive by and inspect them.
- Match your budget to your goals
Decide whether you want higher‑value homes or cheaper lots and remember to include auction fees.
- Conduct due diligence
Visit properties in person to spot red flags, avoid very low‑value parcels that need costly repairs, and check for additional liens.
- Stay patient and consistent
Returns may take months or years; keep calling the county, checking lists and going to sales.
- Seek advice
New investors should talk to professionals or mentors and study resources on tax lien investing.
Case study: turning $5,100 into a larger equity
One student bought a tax‑deed property for $5,100 and discovered that comparable homes were worth about $90,000. By verifying there were no outstanding liens and inspecting the home, they sold it quickly for a substantial profit. Their success came from building a list, doing in‑person research and sticking to a budget.
What is the key trait for success?
The most important trait is patience. Returns from tax liens rarely come quickly; redemption periods can last months or years. Maintaining a long‑term view, staying consistent and doing thorough research help investors avoid mistakes. New investors often expect immediate rewards, but waiting for owners to redeem and handling foreclosure processes takes time. By staying calm and following a plan, you build a strong portfolio over the years.
Frequently asked questions
You don’t need a large budget. Some investors begin with a few thousand dollars. For smaller budgets, focus on low‑priced lots or liens. Always research the property and factor in fees and potential repairs.
Returns depend on the redemption period in your state. Many states allow one to three years. You receive interest when the owner redeems the tax lien or the property when you foreclose.
Yes. You can bid on tax liens or deeds outside your home state. Learn the rules for each state, including redemption periods and auction procedures, before investing.
A tax lien is a claim against the property; investors earn interest when the owner pays back taxes. A tax deed gives you ownership of the property after the sale. Some states use deeds and others use liens, so know which system applies where you invest.
Next steps
Overcoming fear is essential for success. We often wait for a safety net, but as we’ve learned, the “parachute” may not open until after we jump. To start your journey, Read our guide on picking properties for tax deed sales to learn how to build a list, set a budget and narrow your options.Discover why patience is the key trait for success in our article on staying consistent and doing research. Explore partnering on deals for step‑by‑step guidance and community support.
Free resources and call to action
To help you get started, we offer a free mini course on buying tax liens & deeds and an auction calendar that lists upcoming sales. Schedule a free call with our team to receive a custom investment plan and avoid costly mistakes. The best time to begin real‑estate investing was twenty years ago; the second best time is today.
