Buying Your First Tax Lien? Here’s What You Should Know Before You Start
Written By Tony Martinez
Main Points
Tax lien investing is one of the most powerful strategies for creating financial freedom, but let me be clear from the start: it is not a get-rich-quick scheme. Like any real investment strategy, there is a learning curve. If you want to succeed, it is essential to know what you are doing and ensure you have proper research to back up your findings.
There are many new investors who are excited to jump in, but they don’t yet realize what goes into buying their very first tax lien certificate. The truth is, there are some important things you need to understand before you ever place your first bid.
A tax lien gives you the right to collect interest and penalties when a property owner pays their overdue taxes; however, it does not give you ownership of the property itself. That opportunity comes later, through tax deeds, where investors can acquire properties outright for only the amount of taxes owed.
In this article, we’ll cover what you should know before buying your first tax lien certificate, and also explore how you can move beyond earning interest to acquiring physical property through tax deeds.
Expect to Do Real Research
The most important step in this process of acquiring tax liens or tax deeds is research. Every successful investor knows that proper due diligence is the foundation of safe and profitable investing.
Before you put your money into a tax lien certificate, you must confirm the property details, understand the redemption period, verify the interest rate, and review the title for any potential issues.
Research is what separates winning investors from beginners who make costly mistakes. If you are not willing to do the research, tax lien investing may not be the right fit.
Good Tax Liens Are Not Always Easy to Find
Another reality that beginners need to know is that not every county makes it easy to find tax lien certificates. Some lists are online, but many are not. And when you do get the list, it often includes thousands of properties, many of which are not worth your time.
The good news is that this creates opportunity.
Because this process takes effort, most people never even try. With the right systems and training, you can quickly learn how to find the best liens and position yourself ahead of the crowd.
You Might Not Win Your First Time
Here is something new investors are often surprised by: you may not get your very first lien.
Tax lien sales are auctions. That means you are competing with other investors. Sometimes you can go in with a list of properties and not win any of them, but that is totally okay. Sometimes you will win a certificate, and sometimes you will not. That is perfectly fine. Do not let it discourage you.
The key is to stay consistent. Learn the process, do your research, and participate in multiple auctions. In time, you will acquire your first lien, and when you do, you will know you earned it the right way.
One of the greatest benefits of tax lien certificate investing is the education you gain along the way. While a single lien may not make you wealthy overnight, the process teaches you valuable skills in research, property evaluation, and real estate fundamentals. These skills not only make you a smarter investor, they also open the door to even greater opportunities in the real estate arena.
Go Beyond With Tax Deeds
Since there is not significant money to be made with tax lien certificate investing, a natural next step for many investors is to move into acquiring tax deeds.
While tax liens do generate secured returns through interest payments, tax deeds provide the opportunity to acquire the underlying property itself, often for just the amount of back taxes owed, and make lots of potential profit. Together, tax liens and deeds form a balanced strategy that can build both cash flow and equity over time.
Here at The US Tax Lien Association, that is exactly what we teach with our "Get The Property" strategies.
One of our most effective methods is the OTC (Over-the-Counter) Tax Sale Property Acquisition System; a strategy we developed that allows investors to acquire valuable real estate directly from counties for only the back taxes and penalties owed. These properties are transferred free and clear of any mortgage, meaning investors own them outright. Many of our students choose to sell these properties “as-is” for a profit, often without spending money on renovations.
At USTLA, we focus on helping investors navigate both sides of this process with clarity, learning how to evaluate opportunities, avoid unnecessary risk, and approach each investment with confidence.
More Investment, More Reward
You may have seen claims on the internet about buying tax liens for $50 or $100 and becoming wealthy. That is simply not the truth.
Yes, there are liens available for minimal capital. And yes, you can get started with a few hundred dollars. But you are not going to build lasting financial freedom from a $50 investment.
In Iowa, tax lien certificates pay up to 24 percent interest per year. That is the highest in the country. But a $200 lien at 24 percent only earns you $48 for the entire year. That is not financial freedom.
The real opportunity comes from scaling up. As you gain experience and confidence, you will want to increase your investment capital and eventually use specialized strategies, like our USTLA proprietary “Get the Property” methods, which allow you to acquire valuable real estate for a fraction of its value.
The Bottom Line for First-Time Buyers
Buying your first tax lien certificate is an exciting step, but it is important to go in with the right mindset. You need to be willing to do the research. You need to understand that it takes effort to find the right liens. You need to accept that you may not win your very first auction. And you need to know that true wealth comes not from a single $100 lien, but from building the skills and systems that allow you to scale.
Here at USTLA, our highest level of expertise is showing investors how to transition from simply holding liens to actually acquiring properties free and clear through our proprietary “Get the Property” tax deed strategies.
These systems give you the opportunity to purchase valuable real estate for the price of the back taxes and penalties only and then either sell the property “as-is” for a profit or hold it for long-term cash flow.
Our training and support are designed to walk you step by step through this process, so you can confidently move beyond beginner investing and into true wealth-building strategies.
If you are ready to learn how to acquire real estate at massive discounts through the power of tax lien and tax deed investing. Explore our Free 3-Module Online Video Crash Course today.
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Featured Lessons
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.