Tax Deed Vs Tax Lien: Which One Is Right for You?

Tax Deed Vs Tax Lien Investing, both have their benefits. Which one suits you better depends on your goals.

Tax Deed Vs Tax Lien, which one is better for you? In this article, we’ll provide an overview of tax liens and tax deeds, touching on the differences between them and sharing insights to help you make an informed decision. Both involve some risk, but they can yield significant returns when approached correctly.

Tax lien certificates and tax deeds center around delinquent property taxes. When a property owner fails to pay their taxes, local governments can issue tax lien certificates or tax deeds. Understanding the distinctions between the two will allow you to weigh your options and determine which investment path suits your objectives and risk tolerance better.

Key Takeaways

  • This article offers an overview of tax lien certificates and tax deeds as investment tools.
  • Understanding the differences between the tax deed vs tax lien investing is vital for informed decision making.
  • Learn expert insights to help you decide which investment path best fits your objectives and risk tolerance.

Tax Deeds or Tax Liens?

Exploring Tax Liens

tax deed vs tax lien certificate investing

Tax lien certificates are issued when a property owner fails to pay property taxes. The local government claims the outstanding tax debt by placing a lien against the property and then auctions off the lien.

You can purchase these certificates, with the expectation that they’ll be paid back with interest by the property owner, and the interest rate can be as high as 36%. Over 95% of tax delinquent property owners will pay off their tax debt. However, if they don’t, then as the tax lien certificate holder, you can foreclose on the lien and acquire the property

This type of investment is considered a passive investment, as you mainly need to wait for the property owner to pay off the debt within the allotted redemption period.

Delving Into Tax Deeds

With tax deed investments, the government seizes tax delinquent properties and then auctions them off to investors. Bidding begins at or near the amount of the unpaid property taxes, enabling you to purchase tax defaulted real estate for pennies on the dollar. By buying a property through a tax deed auction, you immediately own it and can decide what to do with it, whether it’s selling, renting, or renovating.

comparing tax deed vs tax lien real estate investing

This type of investment usually requires a larger initial investment and more effort compared to tax lien certificate investing.

Tax Lien Certificates Vs Tax Deed Investing

Tax lien certificates typically require a smaller initial investment and are considered passive investments. However, you may need to wait up to two or three years for the property owner to repay their debt.

On the other hand, tax deed investments allow you immediate ownership and control over the property but may involve more extensive work and a higher initial investment.

Tax Deed Vs Tax Lien: Time and Money

Both tax liens and tax deeds have their unique time and financial commitments. Tax lien investments can involve waiting for an extended period, while tax deed investments may require more work, from acquiring the property to selling or renting it out.

Reducing the Risks of Investing in Tax Liens and Tax Deeds

To minimize the risks associated with these investments, it’s crucial to educate yourself and conduct thorough research on the property you plan to invest in. Ensure the property has value and isn’t worthless. Verify the property’s condition, title clarity, and potential renovation costs before bidding.

tax deeds vs tax liens property research

Advice for New Investors

As a beginner, it’s advisable to learn as much as possible about the world of tax liens and tax deeds. Attend workshops, read educational materials, and visit auctions to get a feel for the process. By immersing yourself in the learning process, you can make an informed decision on whether this type of investment is the right fit for you.


When deciding between tax deed vs tax lien investing, it’s important to understand the differences and potential benefits of each.

With tax lien certificates, you have a passive investment that generally offers lower entry investments and may be more manageable for those who prefer minimal effort. However, you’ll need to wait for the owner to redeem the property, which can sometimes take up to two or three years. This waiting period could be a disadvantage for those looking for immediate returns.

On the other hand, tax deeds provide the opportunity for immediate property ownership, which can result in faster returns. This option also requires a more substantial investment and ongoing work – fixing up the property, clearing the title, and so on – but it gives you complete control over the property.

Conducting research and knowing what you’re buying is essential for both options to avoid risk.

Tax liens and tax deeds are both lucrative investment options. By exploring the pros and cons of each investment, you can make an informed decision about which suits your needs and preferences best.

If you’d like to know more about tax lien certificates and tax deed investing Ted Thomas provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, auction buying tours, personal coaching with certified coaches, and an interactive map and auction calendar research tool that allows you to visit each county online to find the details about upcoming auctions.

Want to earn massive income from bargain real estate investing? Would you like to buy mortgage-free properties for pennies on the dollar? Or earn double-digit interest rates secured by real estate? Then get started today with this Free Gift.

Ted Thomas

Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.

The Ted Thomas Difference:

  • Ted is recognized as America’s Tax Lien Certificate & Tax Deed Authority and has been helping people with investing in tax defaulted properties for over 30 years.
  • Ted has built a team of certified coaches that have 70 combined years of auction experience and are available to his students by phone to guide and mentor you to avoid getting overwhelmed or worse, losing money
  • Ted has ironclad PROOF that what he is teaching you does work. With hundreds of successful students providing testimonials and a 4.9 Google rating which is unheard of in this industry.
  • Ted and his staff don’t hide behind a website; they can be reached during office hours at 321-449-9940.

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