Tax lien investing can take years or months to pay off, there is immediate gratification to buying tax deeds. Whereas a tax lien can take months or even years to pay off. However, when you buy a tax deed you own the property. You can purchase tax deed properties at huge discounts.
It is important to always do your research prior to buying any type of defaulted real estate, especially tax deeds. There are advantages and disadvantages of buying tax deeds, and to be successful, you must know the rules of the state and county where you will buy tax deed properties. We have a nation wide manual that provide information as well as the unique techniques to use in all 50 states and the US Territories.
There are some disadvantages to buying tax deeds also.
- There could be additional fees and liens that do not show up when buying them at an auction or directly from a government agency
- It is very possible that the property is in need of a lot of repair. It could be facing condemnation, or, has dilapidated structures that are unsafe or need to be demolished.
- Entry into a tax sale property is prohibited by law, so investors must base their purchase price often sight unseen
- Some states allow the previous owner to bring the taxes current even after the tax deed sale, and redeem their property. In these instances the investor recovers their entire investment plus interest. This varies state by state, see or tax sale manual for details.
- Tax deed auctions can be highly competitive. Investors can spend days researching properties to bid only to have them canceled just before the sale or be sold at a high price.