Tax Liens: Tax Lien Investing Courses

Published on June 8, 2023

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Tax Liens: Tax Lien Investing Courses

Have you always wanted to invest in real estate but the skyrocketing prices these days intimidate you?

What if we tell you that it's entirely and legally possible to purchase real estate for a tiny fraction of its price?

Tax Liens: Tax Lien Investing Courses

Yes, you can do so through a relatively low risk investment in tax liens and tax deeds! Note that property taxes are around 1% of the home value, so you can really get a property for pennies on the dollar!

In this article, we'll walk you through how the process works as well as help you in choosing the best tax lien investing course for you so you can get started on your real estate investment journey.

What are Tax Liens?

Tax liens are a legal claim on the property if the owner fails to pay their property taxes on time.

They are considered a first position lien on the property, which means that in the event of default, the holder of the tax lien certificate has priority in assuming ownership if the owner fails to get current with their past due taxes.

What Are Tax Lien Certificates?

What Are Tax Lien Certificates?

Every time an owner fails to pay the tax on their property on time, a lien is placed against the property.

Depending on where you live, the state may offer tax lien certificates which can be purchased at an auction. Tax lien certificate sales are a way for the state or county to get paid so that they can continue to fund public establishments such as parks, school, hospitals, and libraries.

Currently, 31 states issue tax lien certificates. With the exception of Indiana, Maryland, and Wyoming, tax liens have a grace period of one to three years.

What makes investing in these certificates attractive for a tax lien investor?

Holding the certificate gives the investor the right to collect the unpaid taxes along with the penalties charged as an interest rate to the delinquent taxpayer.

Essentially, the investor is paying a homeowner's taxes for them, and they are rewarded with guaranteed interest once the certificate gets redeemed.

What Happens If The Owner Doesn't Pay Their Delinquent Taxes?

If the owner fails to pay their taxes plus any other fees owed within the grace period, the house goes into tax foreclosure. According to foreclosure rules, since tax lien investors hold the first lien position, they can assume ownership of the property.

In this way, you can acquire valuable real estate at bargain basement prices!

What Happens If The Owner Doesn't Pay Their Delinquent Taxes?

In cases of mortgaged properties, it's still a win for you, the investor, as the bank usually pays off the delinquent property taxes in order to protect their interest so you get back the cash you invest plus interest.

Interest rates on tax liens range from 8 to upwards of 30 per cent, depending on state law, and this makes tax lien investing a lucrative venture for investors.

How Do You Earn From Investing In Tax Lien Certificates?

There are two ways for a real estate investor to make money after purchasing tax liens: through interest earned and through acquiring property which you can then sell, lease out, or simply hold to take advantage of capital appreciation.

Through Interest Earned

For a property owner to remove the lien attached to their property, they have to pay off all the back taxes as well as the penalties and other fees that the county may charge them for the delinquency.

If you're only interested in growing your money and not necessarily on property acquisition which comes with its own attendant costs, it is recommended that you purchase tax liens on single family homes.

Through Interest Earned

Most people won't risk losing their homes to unpaid taxes, so certificates on these types of properties almost always gets redeemed so you get your investment back and the interest accrued.

By regularly purchasing tax liens on primary residences which gets redeemed within 1-3 years, tax lien investing can provide you a nice, stable cash flow without having to worry about the holding costs of owning real estate.

Through Acquisition Of The Property

Purchasing an investment property the traditional way entails almost always requires having deep pockets. For instance, you need to be able to afford the down payment--usually 20% of the purchase price.

However, for you to score incredible deals from highly motivated buyers, where properties in great locations sell for way below their fair market value, you need to be able to shell out the cash up front. This high barrier of entry deters newbies from ever taking the leap.

If you're someone who's making your first steps towards financial independence through real estate investing, purchasing tax lien certificates are a relatively inexpensive way to get into the game.

Through Acquisition Of The Property

A certificate typically costs a few hundred to a couple thousand dollars. Afterwards, all you need to do is wait for it to get redeemed or not.

If it's the latter scenario, congratulations! You're now the brand new owner of a property for just a fraction of its market value!

How Do You Purchase a Tax Lien Certificate?

The best thing about tax lien investing is that you don't even have to live in a tax certificate state to do so! In fact, you can do it right in the comfort of your home through assignment purchasing which can be done online.

How Do You Purchase a Tax Lien Certificate?

You can purchase tax lien certificates in three ways, all through an auction:

Premium Bidding

The opening bid on tax lien certificates is usually the total unpaid property taxes which is about 1-2% of the home value.

In a premium bidding, you add a dollar amount to the face value of the certificate. This is usually done in one-dollar increments during the tax sale. As in a classic auction, the one who bids the highest premium wins the certificate.

Do note that you don't get to recover the premium you paid, so essentially, you're lowering the interest that you receive off the certificate.

Rotation Bidding

Each bidder gets a number and then the county offers up a tax lien assigned to each number.

For instance, you're up first. You can either choose to accept or refuse the lien, in which case, it gets offered to the second person on the list. The bidding continues until someone accepts the lien, paying the face value of the certificate and receiving the maximum interest rate.

Bidding Down the Interest Rate

In contrast to a premium bidding, the winning bidder is the one who is willing to accept the lowest interest rate. Instead of one-dollar increments, interest rates get bid down in 1/4% increments.

Tax Lien Investing vs. Tax Deed Investing

While more than half the states do tax lien sales, the others do tax deed sales. Some states follow a hybrid model in which both are made available to investors.

The main difference between investing in tax lien certificates and tax deeds is that having a certificate merely grants you the first position lien while tax deeds grants you the property title itself.

Both are sound investments that could yield income, but you should consider which one you're really after: interest earnings, or property ownership?

Tax Lien Investing vs. Tax Deed Investing

Investing In Tax Lien Certificates

When you purchase a tax lien certificate, it is similar to loaning out cash or investing in dividend-paying companies in the stock market... except this is much better: aside from essentially having a money back guarantee from the local government, there's a chance for you to get an actual, tangible real estate out of it.

With that kind of favorable outcome, you might be worried that you're taking advantage of someone else's financial distress.

Fret not, tax lien sales are a win for everyone involved!

State governments gets the cash for public services, the property owner gets to stay on their house longer allowing them to get ahead of whatever financial setback that brought about their tax delinquency, and you, the investor, gets to grow their money while helping both the government and the homeowner!

Investing In Tax Deeds

Tax deed states work like this: say, a homeowner hasn't been paying their property tax for quite a while, and the state allows a 3-year delinquency period. The state won't do anything during that time, just let the taxes and penalties pile up until it's 3 years delinquent--in which case the house will be auctioned off at a tax sale.

When you acquire tax deed properties, you own them free and clear of mortgage. And since it is sold at an auction, the opening bid is only the amount of back taxes plus the penalty, you almost always get a property at a huge discount!

Investing In Tax Deeds

Do note that in some states, tax sale properties still have a redemption period which means it is well within the original owner's legal rights to reclaim the property once they clear the tax deed and paid the penalties.0

Therefore it is worthwhile to do your due diligence and research so that you only invest in tax deed states with laws that are aligned with your goals as an investor.

What Are The Benefits Of Purchasing Tax Lien Certificates?

You may have heard that being a landlord is a full time job. And that's because it is!

Unless you have a property manager: you are the one who has to market the property, screen your tenants, figure out upkeep and maintenance, pay your tax and other fees, before you can collect payment. Sometimes, bad tenants slip thru no matter how stringent the vetting process, so now you end up with a headache. So yes, giving away a cut off your rental dollars by hiring a manager is worth it just to skip all the hassles.

What Are The Benefits Of Purchasing Tax Lien Certificates?

The same goes when you're flipping a house. Aside from the substantial financial investment in acquiring and renovating the property, you have to invest your time and effort as well. If the investment doesn't pan out, or the tides of the market turn against you, you may not be able to recoup your initial expenditures.

However, with tax lien investing, you get your money to literally work for you!

You get income from real estate without the responsibilities of owning real estate. Isn't that awesome?

The Best Tax Lien Investing Course

Tax lien certificate investing is a great way to grow your wealth and help you achieve your goals. And although we have given you a snapshot of the big picture, we have only merely skimmed the surface of this investment vehicle.

For instance, different states treat this investment vehicle differently, so naturally, states with unfavorable laws would tend to have less competition. On the other hand, states with very friendly laws, particularly those with high interest rates on liens, would attract tax lien investors nationwide, resulting in a cutthroat investing environment.

The Best Tax Lien Investing Course

So how do you navigate these waters?

You need to find your edge so you won't just survive, but also thrive in this field. And these tax lien training courses can help you find yours.

We reviewed several of them so you can be guided on which tax lien investing course is best suited to your needs.

Most Comprehensive: US Tax Lien Association

Founded by Tony Martinez, US Tax Lien Association is an organization committed to helping individuals invest in hidden gems such as tax lien certificate, tax deed, and tax sale overages.

When you sign up for a membership, you get instant access to weekend trainings, mentor protégé calls, and self directed IRA so that you can learn about holding real estate in your IRA. Membership also opens up a wealth of downloadable resources such as up-to-date case studies on market trends. Furthermore, you get to network with members of the organization which can open up more opportunities for you.

Perhaps the biggest advantage in purchasing a membership with USTLA is having access to their proprietary Ultimate Listing Service (ULS), a database on tax liens and tax deed states updated continuously so you never miss out on tax sales, redemption dates, filing deadlines, and online sales.

Membership is available when you purchase their 3-day tax lien course for $1,497.00, which is pretty expensive, but you can check out their free 4-module masterclass before you fully commit.

Most Comprehensive: US Tax Lien Association

Most Accessible: Bigger Pockets

If you're interested in community based learning where you learn alongside veterans in the field, then you can consider a membership with Bigger Pockets. For only $39.00/month, you get access to webinars, workshops, videos, and online courses. Their community of over 2 million tax lien investors are there to provide their insights, and if you're lucky you can get your mentors in the field.

However, if you're looking for a structured tax lien investing course, then this is not it. Be prepared to spend time and effort to sift through posts and discussions so you can gather information specific to your situation.

Most Value for Money: Attorney's Secrets to Investing in Tax Lien Certificates

Created by Darius Barazandeh, a licensed attorney and real estate investor, Attorney's Secrets provides a complete training on how to safely invest in tax liens and deeds.

When you purchase the course for only $249.95, you get an audio CD guidebook and a 240-page course book which discusses the full spectrum of risk that you may face which includes legal, economic, and asset protection issues.

Additionally, since laws differ from state to state, Attorney's Secrets also provides access to their online research center which contains detailed instruction and specific analysis on 26 tax lien states and Washington D.C..

The only catch with this course is it doesn't cover 5 of the tax lien certificate states, so you'd have to find other resources for those on your own.

Most Value for Money: Attorney's Secrets to Investing in Tax Lien Certificates

Most Flexible: Tax Deed Genius

Tax Deed Genius is an 8-week course on tax sale auctions, tax liens, and tax deeds designed by Jackie Jackson, a seasoned real estate professional with over a decade experience under her belt.

Lessons are broken up into modules with corresponding videos and transcripts which you can access anywhere as long as you have an internet connection. These downloadable resources enable you to learn at your own pace, and if you have any questions, you can easily reach out to their team.

Probably the only drawback is the price, which is pretty steep at $2,997.00 but it comes with a 14-day money back guarantee and a free course preview so you can see for yourself before committing.

Frequently Asked Questions: Investing in Tax Liens and Tax Deeds

Where Can I Find Information On Tax Sale Of Tax Deed Properties And Tax Liens?

Where Can I Find Information On Tax Sale Of Tax Deed Properties And Tax Liens?

Since rules and laws on tax sale properties varies from state to state, it would be best to call up your county's tax collector to learn about their process.

You can ask about when the next auction is taking place, as well as information about properties to be auctioned off, so you can do your due diligence and increase of chances of getting the properties or liens you're interested in.

Are There Risk Issues Associated With Tax Lien Investing?

As with any investment, there are risks you have to take in exchange for potential returns.

Properties on auction at a tax sale don't have disclosures, warranty deeds, or inspection reports.

Therefore, as the buyer, you're taking on risk that the house you're trying to purchase isn't what you imagined it to be. Worst case scenario: if it's in pretty bad shape, it might not get redeemed so you end up with real estate that is in dire need of repairs and upgrades before you can use it.

Is It Possible to Acquire the Property if I'm Holding a Tax Lien Certificate Only?


If the redemption period lapses and no action from the original owner is forthcoming, the state will mail you the deed to the property.

Is It Possible to Acquire the Property if I'm Holding a Tax Lien Certificate Only?

Is It Possible To Lose Money When Buying Tax Lien Certificates?


No investment has a hundred per cent guarantee to be profitable.

In buying tax deed properties or tax lien certificates, you might end up with a house that has major structural issues or a mold infestation, for example. Your choice is to sell it as is, or do the repairs and rehab works yourself before you sell it or rent it out.

Another issue you may face is at the end of the redemption period, other liens may come to light which would make it impossible for you to obtain ownership of the property and collect the unpaid balance.

Is It Possible To Lose Money When Buying Tax Lien Certificates?

Closing Thoughts: Tax Lien Investing

Tax lien investing, when done right, can be an effective way to establish a consistent cash flow, grow your wealth, and build your real estate portfolio.

And the way to do it right is by investing in the most valuable resource: knowledge.

This knowledge can be had through courses and books about the subject so you'd be adequately prepared once you get in the arena of real estate investing.

If you'd like to skip straight ahead to scoring an awesome deal on an investment property, and save time and effort from attending tax sale auctions, you can sign up for motivated seller leads here at Property Leads!

Closing Thoughts: Tax Lien Investing

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