Tax Deeds Unlocked: Why Some Investors Prefer Deeds Over Liens

6/10/2025 12:00:00 AM

Tax liens tend to dominate the conversation when it comes to investing in delinquent property taxes However, there’s another route that some investors go through: tax deeds. Instead of buying the right to collect interest on unpaid taxes like you do with liens, tax deeds take things a step further. You’re not just stepping into a temporary position. You’re typically buying the actual property, often at a fraction of its market value.

For investors who want a more direct path to real estate ownership, tax deeds can be incredibly appealing. There’s no redemption period in many deed states, which means that once you win the auction and finalize the paperwork, the property is yours. That kind of immediate ownership has its advantages. In most deed states, you don’t have to wait around hoping the property owner redeems. You can take action right away, whether that means fixing the place up and flipping it, renting it out, or holding it for long-term appreciation.

Another reason some investors prefer deeds is the potential for deep discounts. When properties go up for tax deed auction, they’re often listed at the amount of back taxes owed, which can be dramatically less than market value. That kind of spread opens the door for serious returns if you know what you’re doing. It’s not uncommon to find properties in solid neighborhoods that just slipped through the cracks. If you do your homework, you could end up with a hidden gem.

Of course, buying a property through a tax deed sale isn’t without risk. One of the biggest red flags to watch out for is a clouded title. Many deed properties come with baggage you won’t always see at first glance, such as, unresolved liens, code violations, or structural issues. Since you’re becoming the owner, any problems tied to the property may become yours to deal with. That’s why solid research is non-negotiable. Pull county records, check for outstanding liens, and whenever possible, drive by the property or examine it virtually. It’s also smart to build relationships with title companies or legal professionals who can help you navigate issues that come up after purchase.

Some investors thrive on the hands-on nature of tax deeds. They like rolling up their sleeves, evaluating neighborhoods, estimating rehab costs, and negotiating cleanup of title issues. Others might find it too intense, especially if they’re just looking for passive returns. But if you're comfortable with a little risk and eager to own real estate outright, tax deeds offer a fast track.

At the end of the day, it really comes down to your investment style. If you want predictable interest payments with minimal involvement, tax liens might be your lane. But if you’re in it for the long game, not afraid of a little research, and excited by the idea of owning property at a discounted rate, tax deeds could be your golden ticket. It’s not about one being better than the other. It’s about understanding which one aligns best with your goals and your tolerance for risk.

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.