The Biggest Lie in Tax Lien Investing: That You’ll Instantly Get Rich
Written By Tony Martinez
Main Points
Let’s keep things real.
You won't get rich with tax lien investing alone, and the money you make definitely won’t be instant.
This myth about “overnight wealth” is not only misleading but also dangerous. It sets up false expectations and causes new investors to overlook the real strategy behind tax lien certificates.
Tax lien investing is a smart strategy, but it’s not a get-rich-quick scheme; it requires research, effort, determination, capital, and persistence to generate a substantial profit.
In this article, we’ll break down where this myth comes from, what most people misunderstand about tax liens, and what it actually takes to earn money using this approach. By the end, you’ll walk away with a clearer understanding of how tax lien investing works and how to use it as a reliable, long-term path to profit.
Where The Tax Lien Lie Stems From
The myth that tax lien investing will make you instantly rich, or that you’ll earn massive returns effortlessly, often begins with flashy marketing from internet “gurus.”
You’ve probably heard the pitch: “Earn 24% interest, no risk, no work!”
Sounds too good to be true? That’s because it is.
While it’s true that some states offer tax lien certificates with interest rates as high as 24%, those numbers don’t tell the whole story. They’re legally possible, but not guaranteed, and rarely apply to every lien in a given auction. More importantly, earning those returns requires thorough research, strategic planning, and patience.
And don’t forget, you need a substantial amount of capital to make 24% annually worth your while.
Let's use an example:
If you invest $1,000 at 24% and, let’s say, everything goes to plan, after a year, you will have made a profit of $240.
If you invest $10,000 at 24%, after one year, you will make $2,400. That sounds nice too, but investing $10,000 to begin with and having it just sit there is not a way to get ‘instantly rich.’
The truth is, tax lien investing is a structured, state-regulated process. There are real opportunities, but also real rules, timelines, and variables to consider.
Many of the biggest misconceptions stem from a fundamental misunderstanding (or deliberate oversimplification) of how tax lien certificates work, how interest accrues, and how redemption periods affect when, or if, you receive payment.
3 Truths People Do Not Realize About Tax Lien Certificates
If you are reading this and think, ‘Well, I am investing in tax lien certificates to get the physical property,’ think again!
1. Tax lien certificate investing is not a property acquisition strategy.
Let’s set the record straight: tax lien certificate investing is not designed to help you acquire property. It’s a financial instrument that allows you to earn interest on someone else’s unpaid property taxes; it's not a shortcut to owning real estate.
Many investors use tax lien certificates as a way to learn the system, from understanding how auctions work to navigating county records and comprehending redemption periods. It’s a great entry point into the world of real estate investing because it teaches discipline, research, and due diligence without the complexity of property management.
But if you’re expecting to walk away with the deed to a home, especially a primary residence, you’re going to be disappointed. More than 99% of tax lien certificates on owner-occupied homes are redeemed, meaning the homeowner pays off their taxes and you collect your interest, not the property.
2. You do not get a monthly income.
One of the biggest misconceptions about tax lien investing is that you’ll receive regular monthly payments from the government. That’s simply not how it works.
When you invest in a tax lien certificate, the money you put in stays tied up in that investment until the property owner redeems the lien. Only then, whether it takes a few months or a few years, do you get paid. And when you do, it comes in a single lump sum: your original investment amount, plus the interest set by state law.
It’s a one-time payout, not a recurring income stream. While tax liens can provide safe, predictable returns, they’re not designed for ongoing monthly cash flow. Understanding this upfront helps you plan your investments with the right expectations.
3. Even ‘cheap’ liens come with costs, delays, and require research.
It’s tempting to pursue low-cost tax lien certificates, thinking it’s an easy entry point; however, the truth is that even these inexpensive liens come with hidden layers of time, cost, and responsibility.
You’ll still need to pay administrative fees, wait months (or even years) for the lien to redeem, and conduct proper due diligence before buying. Some of the cheapest liens are associated with the least desirable properties, including landlocked lots, unusable parcels, or severely distressed buildings.
That means research is non-negotiable, no matter the price tag.
Even a $100 lien can be a waste of money if it’s tied to a worthless or unsellable property. Cheap doesn’t always mean smart, and real success comes from choosing the right liens, not just the ones with the lowest cost.
What You Can Expect From Tax Lien Certificates
Tax lien investing offers fixed, predictable returns that aren’t tied to the ups and downs of the stock market. Each investment is backed by real estate and protected by state law, providing a level of security that many other strategies can’t match.
This isn’t a quick-cash scheme; it’s a steady, long-term approach to generating profits over time. With the right strategy, research, and patience, investors can achieve tangible and consistent outcomes. We’ve seen it firsthand: people earning solid returns not through hype, but through realistic expectations and proven systems.
How To Make Money With Tax Liens
Now that you know tax lien certificates won’t get you instantly rich, you may be asking, ‘What will?’
Well, of course, nothing good comes easy, and tax liens are not a get-rich-quick scheme, but if you put in the time, effort, capital, and perseverance, you can make some profit investing in both tax liens and tax deeds.
Tax lien certificates are great for generating secured, interest-based returns with minimal ongoing management. You’re not chasing property; you’re earning consistent, state-regulated interest on your capital. It’s a conservative, passive strategy that helps preserve and grow your money over time.
Tax deeds, on the other hand, are all about acquiring real estate at steep discounts. These require more capital and effort, including research, title checks, and sometimes rehab, but they offer the opportunity to build equity quickly, flip for profit, or hold for cash flow.
When used together, tax liens provide steady, lower-risk returns, while tax deeds offer larger, higher-reward opportunities. Many experienced investors use tax liens to build experience and grow capital, then deploy that capital into tax deed opportunities to acquire and control physical property.
The real power lies in knowing when to use each tool and how to combine them to support your short-term income goals and long-term wealth strategy.
Here at the US Tax Lien Association, we can help you achieve your investment goals. If you are curious about learning more or wanting to get started, check out USTLA’s Free 3-Module Online Tax Lien Investing Course.
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Vital Information Beginner’s MUST KNOW FIRST so you can Get Started Right
Lesson #1
What is Tax Lien Investing & How Can it Help You Achieve Financial Freedom
Lesson #2
How to Acquire Properties for the Back Taxes & Penalties Only
Lesson #3
How Much Investment Capital is Needed to Get Started?
As with all investments, there is always an element of risk. Even if the interest rates are written into state government law, mandated by state government law, and are regulated by state government law, there is a chance of you losing part or all of your investment. You must always try to get the best education and practice safe investing, no matter which investment vehicle you choose.