Avoidable Mistakes When Evaluating Tax Lien Properties

5/22/2025 12:00:00 AM

When you’re first getting into tax lien investing, it’s easy to get caught up in the thrill of the auction and the promise of high returns. But one of the places where many investors, especially newer ones, tend to slip is in evaluating the actual properties behind the liens. And that’s where things can quickly go sideways.

One of the biggest mistakes you can make as an investor is skipping the property inspection. It may not always be possible to visit every property in person, especially if you’re investing in another state. But that doesn’t mean you should go in blind. We live in a digital age. Tools like Google Street View, county property records, Zillow, and even local Facebook groups can give you a pretty solid feel for the property’s condition and neighborhood. A few clicks can reveal things like boarded-up windows, overgrown lawns, or homes that clearly haven’t been touched in years. Red flags like that are easy to miss if you don’t bother looking.

Another trap is assuming that unpaid taxes equal a bargain. Just because a property ends up on the tax lien list doesn’t mean it’s some undervalued treasure waiting to be discovered. Sometimes it’s there for a reason—maybe the local market has dipped, or the property is in an area with low demand. If properties nearby are struggling to sell or sit empty for months, that "deal" might not be as great as it looks on paper. Always check the local market trend before jumping in.

Then there’s the issue of hidden baggage, things like other liens or legal claims. It’s easy to assume you’re just dealing with unpaid property taxes, but sometimes you’re stepping into a mess that includes IRS liens, code violations, or unpaid utility bills. These don’t always go away with foreclosure, and if you’re not careful, you could inherit more debt than you bargained for. A quick title search or conversation with the county office can save you from future headaches.

It’s also common for new investors to move too fast. The excitement of getting your first lien or getting what seems like a great property can make you skip steps. But tax lien investing isn’t a race—it’s more of a strategy game. The investors who tend to succeed aren’t necessarily the ones who grab the most liens; they’re the ones who make smart, informed choices consistently.

Doing your homework might not be the most exciting part of the process, but it’s the part that protects your money. Verifying the basics; property condition, location, market value, existing liens helps you spot the difference between a true opportunity and a potential money pit.

At the end of the day, tax lien investing can be a solid addition to your wealth-building plan, but only if you approach it with care. Take your time, do your research, and remember: one well-chosen lien is worth far more than five that were rushed into. Investing smart beats investing fast every time.

This blog post is for informational purposes only and should not be relied upon as financial or investment advice. Real estate investments carry risk and individual results will vary. Always consult with your team of professionals before making investment decisions. The authors and distributors of this material are not liable for any losses or damages that may occur as a result of relying on this information.