Last Updated on August 30, 2025
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Start Here: A Simple Guide to Tax Lien Investing
Tax lien investing may look easy, but you still need to be careful. In this article, I’ll explain what a tax lien is, show you how to get started, and share some easy tips.
What Is a Tax Lien?
A tax lien is a legal claim the local government puts on a property when the owner doesn’t pay property taxes. The county makes a tax lien certificate that shows how much money is owed. The county sells these certificates to investors like us. When you buy one, you pay the unpaid taxes. The homeowner must pay you back, plus interest. If they don’t pay you back on time, you might be able to take the property for just the back taxes.
Most of the time, you earn money from the interest, not from taking the house. Taking a property is rare and can be hard.
Why Start with Tax Lien Investing?
I like tax lien investing because it can be a safe way to invest in real estate. Your investment is backed by the property itself. In many states, you can earn interest from 4 % to 36 %. You don’t have to fix anything or manage tenants. Your main job is to do the homework and buy the lien.
A Step‑by‑Step Plan
| Step | What You Do | Tools & Hints |
| 1. Learn the rules | Find out how tax‑lien certificates work in your state. | Ask the county tax collector or search official county websites. |
| 2. Find the sale | Contact the county to learn when and where the tax‑lien sale happens. It might be in person or online. | Register early if needed. |
| 3. Check each property | Use the parcel number to look up the property on maps and real‑estate websites. Make sure the property is worth more than the taxes owed. | Use LandGlide, Zillow, Realtor, HomeSnap, or Property Shark. |
| 4. Look for other liens | Check if there are older tax liens or other claims on the property. You need the oldest lien to take the property. | Ask the county recorder or check public records. |
| 5. Go to the sale | Bid on liens you have researched. Don’t overbid. You may lower your interest rate or pay extra money to win. | Set a limit and stick to it. |
| 6. After you buy | Pay the county and get your certificate. Wait for the owner to pay you back. If they don’t, you may get the property. | Keep good records and watch the dates carefully. |
Risks and Simple Tips to Start in Tax Lien Investing
- See the property if you can:
Buying a property without seeing it is risky.
- Do your homework:
It’s better to skip a deal than to buy a bad one.
- Watch property value:
If the lien is more than the property is worth, don’t buy it.
- Know repair costs:
If you take the property, you might have to fix it.
- Stay calm:
Don’t bid just because everyone else is bidding.
Pros and Cons
Pros:
• You can earn high interest (4–36 %).
• Your money is backed by real property.
• You can start with a small investment.
Cons:
• Getting the property is rare and can be hard.
• There may be hidden liens or repairs.
• It takes time and research.
Frequently Asked Questions
A tax lien certificate is a document that the county creates when a homeowner doesn’t pay property taxes. It shows how much is owed and can be sold to investors.
Contact your local county treasurer or tax collector. They will tell you when and where auctions or online sales happen and how to register.
No. Most investors earn money from interest paid by the homeowner. Foreclosing on a property is rare and can be complicated.
The property could have other liens or need repairs. Always do thorough research before you buy
Final Thoughts
Starting with tax lien investing is a good way to learn about real estate. You need to be careful and do your homework. Even when you do your research, buying without seeing a property is still risky.
I hope this article helps you continually grow and move forward with real estate investing. And if you think you’ve got stuck, feel free to give us a call; we’d love to help you.
Happy investing!
Dustin
