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If you already invest in real estate and want a lower-cost way to put capital to work, tax liens are worth a closer look. They let you earn a fixed, legally set return without a mortgage, a renovation, or the carrying costs of owning a property. This guide covers what these sales are, where to find them, and how the process works.
What You Are Actually Buying
When an owner stops paying property taxes, the county places a legal claim, called a lien, on the property for the unpaid amount, then sells that debt to investors as a tax lien certificate to recover the money sooner. This is where the phrasing trips people up: in most cases you are not buying the house or the land. You are buying the debt. The owner repays what they owed plus interest, and you earn your return. If they never repay, you may eventually have the right to foreclose and claim the property, though that outcome is uncommon.
It helps to keep two terms separate. A tax lien means you buy the unpaid debt and earn interest when the owner repays. A tax deed means you buy the property itself at auction. Some states sell liens, some sell deeds, and a few do both. If that distinction affects your plan, our breakdown of tax lien vs tax deed investing and our overview of property tax liens cover it in more detail.
Interest Rates and Redemption Periods by State
Your return and timeline depend entirely on where the lien sits. Both the maximum interest rate and the redemption period are set by law, not the seller, which makes this approach predictable once you know the local rules. Always confirm current numbers with the county before you bid.
| State | Maximum Interest Rate | Typical Redemption Period |
|---|---|---|
| Florida | Up to 18% | 2 years |
| Arizona | Up to 16% | 3 years |
| Illinois | Up to 36% (18% per 6 months) | 2 to 3 years |
| Iowa | Up to 24% (2% per month) | ~2 years |
| Alabama | Up to 12% | 3 years |
Keep in mind that the maximum rate is a ceiling, not a guarantee. Because investors compete at auction, the winning bid is often well below the legal cap, especially in popular counties, so set a personal limit before you start bidding.
Where to Find Tax Lien Properties for Sale
Once the mechanics make sense, the next question is where the lists are. A few reliable sources:
- County treasurer and tax collector sites. The original source. Most offices publish a delinquent list each year with auction dates and registration rules, such as the California State Controller's public auction page.
- Online auction platforms. Many counties run sales through GovEase, Bid4Assets, or RealAuction, which host the auction and lists in one place.
- Over-the-counter liens. Liens nobody bids on can be bought directly from the county afterward at the maximum rate, with no bidding war.
- Lead tools. Rather than checking dozens of county sites, software like DealMachine lets you pull tax-delinquent lists and filter by how long an owner has been behind. To layer in other distress signals, see our guide on how to find deals from liens and tax delinquencies.
How to Invest, Step by Step
Once you find a sale you want to join, the sequence is straightforward.
- Confirm your area and rules. Check whether the state sells liens or deeds, and note the rate and redemption period.
- Register for the auction. Most sales require pre-registration by a deadline, with set forms and payment methods.
- Research the property. Review value, condition, location, and other liens. A cheap certificate on a worthless lot is not a bargain.
- Set your maximum. Decide the lowest rate or highest premium you will accept, and hold that line.
- Bid and pay. If you win, you pay the taxes owed and receive your certificate.
- Wait or act. Collect your interest when the owner redeems, or foreclose if they do not.
Risks Worth Weighing
The advantages are real: low entry costs, interest rates set by law, and a position that usually takes priority over other debts. Still, this is not free money. A lien on unbuildable or near-worthless land does little good if the owner never repays, your capital can sit idle for the full redemption period, and foreclosure is a legal process that only a small share of liens ever reach. For where newer investors slip, review the most common property tax investment mistakes before your first auction. Careful research is what separates a steady return from a costly surprise.
Moving Forward
The process becomes manageable once you break it into pieces: understand that you are buying debt, learn your state's rules, find the lists, and do your homework before you bid. When you are ready to build a list of tax-delinquent properties, DealMachine can help you focus on the leads most worth your time.
Frequently Asked Questions
Are tax lien properties a good investment?
They can be, particularly for investors who want rule-based returns and a low entry cost. The trade-off is that your capital may be tied up for a year or more, and strong returns depend on research before you bid.
How do I find tax lien properties for sale near me?
Start with your county treasurer or tax collector website, which posts the annual delinquent list and auction dates. Many counties also run sales through platforms like GovEase or Bid4Assets, and tools such as DealMachine can pull tax-delinquent lists so you can research an area without visiting each county site one by one.
What states sell tax lien certificates?
Roughly two dozen states plus Washington, D.C. sell tax lien certificates, including Florida, Arizona, Illinois, Iowa, and Alabama. Other states sell tax deeds instead, and a few use both systems. Always confirm your state's rules before planning a purchase.