Tax Lien Investing: How About Letting The Government Collect Money For You?!?!

In What Universe Does the Government Collect Money for YOU?!

When you pursue tax lien investing for your IRA, the government actually does collect the profit for you! As an added benefit…if you purchase tax liens with your self-directed IRA and/or your self-directed 401(k), the government allows you to collect those profits tax free and/or tax deferred, depending on the retirement account type you have.

Introducing Tax Lien Investing

Tax lien investing is popular for smaller capital investments, and since many counties have unsold tax liens there is a lot out there to choose from. There are a lot of benefits in purchasing tax liens such as:

  • High Rates of Return
    • Interest rates vary by state statute: 8% to 50%
  • CAN be well collateralized
  • Every State has different procedures for Certificates or Deeds
  • Some states such as Texas have a hybrid system
    • A deed sale with the right of redemption

Tax Lien Investing Strategies

Here are some strategies that seasoned self-directed IRA and tax lien investors identify as the ‘key to successful tax lien investing”:

  • Purchase a lien that has passed the redemption period in order to obtain the property
  • Acquire the property immediately (subject to quiet title action)
  • Define your goal
    • Obtain property
        • Find owner of property to buy prior to tax lien sale in order to purchase the property direct.


    • Earn interest

Remember: Tax Lien Investing is a great tool for self-directed IRAs or Investors with limited capital!

Tax Liens ‘Due Diligence’

Due diligence is required as if you are purchasing the property. Here are some items to look into prior to the auction

  • Land condition and location
    • Swamp land
    • Environmental Issues
  • Land value
  • Probability the lien will be redeemed
    • If it is a single family, then it is most likely the lien will be redeemed.

Exactly How Do You Find Tax Liens?

These simple steps will help you find those tax lien investing opportunities:

  • You need to find the auction
  • Location
  • Date
  • List of available properties
  • Rules
  • List of unsold Liens


  • Auction and tax lien information can be found
    • In your local newspaper
    • Online:
    • Via service providers who purchase liens on your behalf (ask for references)
  • Bidding
    • Be sure you understand the process prior to bidding


  • Sales Process
    • Bid down interest rate
      • 16% buyer may agree to pay 12% – the difference goes to the county
    • Premium bid – higher than amount owed
    • Random selection for multiple bidders for same lien
  • Paying
    • Generally you must pay within 48 hours – find out in advance of the auction
  • Redemption Periods for Tax Lien Investing
    • Vary by locality – verify with the area in which you want to invest in prior to the auction
      • If your desire is to own the property, consider bidding on subsequent years.
    • 95% of all liens are redeemed

All investments have inherent risks. With proper due diligence and a professional team, risk can be managed but not eliminated-that is our job as investors. If you don’t want to take a risk whatsoever, tongue in cheek I say “Put it in U.S. Bonds or FDIC Insured CDs…though as you all know…Bonds and CDs are offering very low returns”.