Why Using Tax Liens AND Tax Deeds Is Key to Success
Written By Tony Martinez
Main Points
For over three decades, we’ve taught investors that the real power in delinquent property tax investing comes from understanding the full range of opportunities available. Some investors focus solely on tax lien certificates, while others specialize in tax deed properties. But the truth is, the most successful investors know how to leverage both to their advantage.
Let’s break down the benefits and drawbacks of each investment strategy, and then look at how combining them can create a strong path to long-term financial freedom.
The Benefits of Tax Lien Certificates
Tax lien certificates are among the safest, most reliable real estate–backed investments in America. When you purchase a lien, you gain a first-position claim against the property for the amount of unpaid taxes owed.
The goal with tax lien certificates is to earn interest on your investment. But, while the rates may sound high, the actual returns are often modest.
Here are some of the biggest benefits:
Fixed secured returns are available ranging from 8% to 24% interest per year.
Recession-proof security; your return doesn’t fluctuate with the stock market or economy.
High level of safety; meaning homeowners almost always redeem.
Win-win for communities because your investment provides counties the funds they need for schools, police, fire departments, and roads.
For investors who want predictable, fixed returns backed by real estate, tax lien certificates are one of the most attractive options available.
The Benefits of Tax Deed Investing
Tax deed properties are where you can acquire real estate itself for the price of the back taxes and penalties owed. That means instead of simply earning interest, you can own the property free and clear with no mortgage.
Here are some of the benefits:
Acquire valuable real estate at huge discounts, often pennies on the dollar.
Immediate ownership in most states, without waiting through a redemption period.
Flexibility to sell for a profit or hold for long-term cash flow.
Wealth-building potential that goes far beyond interest income alone.
Tax deeds give you the opportunity to create real wealth by building a portfolio of properties at massive discounts.
The Drawbacks of Both
Of course, no investment strategy is perfect. Tax liens and tax deeds each have their drawbacks.
Tax liens:
They are not liquid; so, you may need to wait months or years for repayment.
'When' you get paid back depends entirely on when the property owner redeems their lien.
To generate large income, you need significant investment capital, since interest rates are annualized.
Tax deeds:
Competition at public auctions can drive up prices.
Rules and procedures vary widely from state to state, and even county to county.
These drawbacks don’t make either strategy ineffective; they simply underscore the importance of taking a comprehensive approach.
That's exactly where USTLA comes in; we show you how to avoid the auction crowds and buy tax deeds over the counter for incredible discounts.
With our "OTC Tax Deed Property Acquisition" strategy, you can pick up real estate for only the back taxes and penalties, own it outright with no mortgage, and even sell it “as-is” for profit without putting any money into repairs.
Why Using Them Together Creates the Strongest Results
The key is not choosing between liens or deeds, but learning to use both and using the benefits of each to your advantage.
Tax liens give you safe, fixed, predictable returns while tax deeds give you the opportunity to acquire real estate for a fraction of its value. When you combine them, you build both stability and wealth.
For many investors, starting with tax liens and then moving into tax deeds is the best way to get comfortable with the system. Once they understand the process, they can confidently transition into acquiring physical properties.
By starting with liens and then transitioning into deeds, investors not only master the foundation but also position themselves to acquire properties free and clear, building real wealth over time.
Ready to Take the Next Step?
Here at USTLA, we help investors go beyond just earning interest. Our focus is on teaching you how to acquire deeply discounted properties through our "OTC Tax Deed Property Acquisition" strategies. These systems allow you to purchase real estate for the price of the back taxes and penalties only, own it free and clear with no mortgage, and either sell for a quick profit or hold for long-term wealth.
If you are ready to take the next step and learn how to combine the power of tax liens with the profit potential of tax deeds, check out our Free Online 3-Module Crash Course to explore our proven strategies today.
USTLA's FREE Comprehensive
3-Module Tax Lien Investment
Online Crash Crouse
The ultimate beginner's guide to successful tax lien
certificate & tax deed investing.
Start Learning from the Comfort of Your Home Today
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.