are platforms for investment; the instability of stocks in the market makes investors shift their investments to other platforms that are more reliable and have minimal risk, real estate tax lien is one such, and it provides investors a high rate of return on their investment. The real estate tax lien represents a legal claim against a property for unpaid property taxes it prevents a property from being sold until the taxes due have been paid and the lien lifted. Failure of real estate owners to pay the taxes levied on their property would result in the city or state placing a lien on such property. When issuing a lien, a tax lien certificate showing the amount due as well as other interests and penalties are given to the real estate owner. The tax lien certificate is auctioned and the highest bidder retains ownership, i.e. the homeowner, on whose property the lien was issued, would have to pay the amount due for the tax, penalties, and interest to the bidder because failure to do so would result in the homeowner losing the property to the lienholder.


Real estate tax liens are a form of investment; they can be bought and sold at auctions the same way landed properties are auctioned, online, or in a physical location where the interested parties are present. The investors either bid up a premium on the tax lien or bid down the interest rate on it; the premium on the tax lien is the difference between the amount paid for the property and the security face amount at the time of issue. The investor willing to pay the highest premium or accept the lowest interest on the lien gets the tax lien on the real estate being bided for.

Investors willing to purchase a tax lien would have to decide what type of real estate they are interested in; a residential, commercial, or industrial real estate. They also need to access the property that might eventually be theirs, evaluate the market value before venturing into purchasing the lien tax.  Every property in a state with a tax lien assigns a specific number to their properties; information on such property can be accessed online such as the address, name of the owner, market value, legal description, state of the property, and other structures on the property. The city treasurer office can also direct interested investors accordingly on the requirements, methods of payment, and other necessary details, as well as the venue for auctions. RealEstateCake can also help connect interested investors of tax lien to sellers to deal with the hassle of searching for tax lien investment.


The purpose of every investment is to make more money, and such is the purpose of investing in real estate tax liens. The investor after getting the highest bid for the tax lien and completes the payment gets ownership of the lien certificate. The investor makes a profit from the amount due in the lien; the house owner must pay the investor the entire amount of the lien and the interest with a range from 10% to 12%. In some cases, where the investor had to pay a premium for the tax lien, the amount is repaid by the property owner. Usually, the property owner is to pay up the debt within six to thirty-six months, depending on the laws of the state; inability to pay within that time, the investor can foreclose the property i.e. he or she retains ownership of the property and can decide to sell it off.


  • Investing in real estate tax liens yields substantial rates of interest and return on investment
  • Tax lien investment offers a lower capital input when compared to other investment forms
  • It is a good opportunity for experienced real estate investors as they know how to maneuver the market and maximize their returns
  • Investors can be purchased at low prices depending on the type of property
  • The investors stand a chance to make a whole lot from the lien and interests or penalties; in a few cases, the premium paid by the investor is repaid by the homeowner
  • Investors might end up retaining ownership of the property if the owner is unable to pay outstanding dues during the allotted time frame


Although investing in real estate tax liens have mouthwatering and tempting benefits; there are some cons attached to it, here they are:

  • Tax liens are not advisable for a newbie investor and those with little knowledge and experience on real estate
  • Investing in tax liens for a dilapidated building in a ghetto environment would cost the investor a whole lot, no matter how cheap the tax lien, as homeowners may most likely not be able to repay outstanding payments
  • Properties with environmental hazard will cost the investors
  • Tax liens are not eternal; after the expiring date, the lien holder would not be able to reclaim any lost balance
  • Most commercial institutions channel their resources towards procuring tax lien certificate as they outbid any competition; this makes it difficult for individual investors to invest in this area
  • Some real estate property have the possibility of subsequent lien which the lienholder will have to bear

Experienced real estate investors can thrive in the tax lien investment as they know what to do and make proper researches on the property before investing and they also make sure they could generate substantial profit over the specified period.


Every investment has certain guidelines investors must follow to make the most of their investment; this is no different for a real estate tax lien investor. Here are a few of the necessary tips:

  • Survey the property – this point cannot be overemphasized; before you decide to invest in a property you must first investigate. Know the state of the property, the area it is in, the market worth, and an estimate of the future return. Investing in a worthless property that cannot be redeemed is akin to buying a losing lottery ticket.
  • Check the record – in investing in a real estate tax lien, take out time to visit the state tax collector’s office to check the records of the property. Are the statutory procedures in placing the tax lien on such property orderly? Is the tax still valid? How much has been paid and how must is left? Any and every necessary information on the tax lien of the property should be properly verified before investing.
  • Start small and local – any investor is advised to start small and local; start with your city or state before expanding your reach. Find out how tax lien sales are conducted and how you can participate, access their values. Most local areas do not have several liens and therefore are most likely to have large competitions with big investors.
  • Observe your investment –a tax lien on a property that extends for a long investment should be properly monitored. Observe your investment, keep the house owner informed that you own the lien certificate, pay the appropriate amount for investment at the end of every redemptive year. Failure to do all these, another investor may buy the lien and claim ownership
  • Wait – waiting means being patient; ROI, return on investment may delay for some time may be due to bankruptcy on the part of the property owner, but eventually, you would get your profit

Having accessed the risks and benefits involved with investing in real estate tax liens, RealEstateCake brings sellers and potential buyers together.

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