Start Tax Lien and Tax Deed Investing

1. 1

   Learn the two systems and your state's version

   Lien states sell the right to collect the unpaid taxes plus statutory interest, and the owner usually redeems (pays up) during a redemption period, so the common outcome is interest on your money, not a property. Deed states auction the property itself. Rules, interest rates, redemption periods, and auction formats differ by state and often by county; the county's own published rules outrank every course and video.

2. 2

   Understand the honest economics

   Statutory lien interest rates sound high, but competitive auctions bid returns down (in bid-down states) or premiums up, professionals and funds bid alongside you, and capital can sit locked through redemption periods measured in months or years. Properties at deed auctions can sell below market, and they can also swallow your money whole. Nobody should enter expecting easy riches.

3. 3

   Make due diligence your entire strategy

   Before bidding on anything: look at the parcel (drive by or study maps and street imagery), check assessed versus realistic value, look for other liens and code violations, confirm it is not a landlocked strip, a drainage ditch, or an environmental problem, and verify what survives the sale in that county. Every experienced investor has a story about the worthless sliver someone else bought blind; the homework is the moat.

4. 4

   Start at real auctions with small money

   Attend or log into several county auctions (many now run online) without bidding, paper trade your picks against actual results, then start with small liens or low-cost parcels where a total loss would sting but not wound. Treat the first cycle as paid education, budget for it, and keep records like the investor you intend to become.

5. 5

   Manage the after-purchase reality

   Liens require tracking redemption deadlines and sometimes paying subsequent years' taxes to protect your position; foreclosing on an unredeemed lien is a legal process with real costs. Deeds often need a quiet title action before title insurance and resale are possible. Budget attorney fees into every deal model from the start, not after.

6. 6

   Scale only what the records prove

   After a full cycle, your own spreadsheet tells the truth: actual annualized returns on redeemed liens, actual all-in costs on any property acquired, and hours spent. Grow the parts that performed, in the counties you now genuinely know, and keep this as one lane of a portfolio rather than a get-rich plan. The compounding asset is county-specific knowledge.

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