(And when that’s actually true)
If you’re searching for ways to buy real estate below market value, you’ve probably come across tax liens and tax deeds. And you’ve likely heard the claim:
“Tax deeds are the cheapest way to acquire property.”
There’s truth to that—but it’s also incomplete.
Let’s break it down clearly so you understand why tax deeds can be cheap, and just as important, where investors get burned.
Learn Tax Deed Investing from Jason Porter
If you’ve been trying to understand how tax deed investing actually works—not just the surface-level version—you’re not alone.
That’s exactly why we’ve invited Jason Porter to speak at our upcoming MAREI Meeting on May 12th.
Jason has been investing since the early 1990s and has spent nearly two decades focused specifically on tax lien and tax deed investing. He’s seen what works, what doesn’t, and where investors make costly mistakes.
Before he joins us, here’s a short video where he explains one of the biggest reasons investors are drawn to tax deeds…
First: The 3 Ways Properties Are Sold
Every deal you’ll ever do comes from one of three places:
- People (direct to seller deals)
- Banks (foreclosures, REOs)
- Municipalities (tax liens and tax deeds)
That framework matters—because the seller’s motivation determines the price.
Why Deals From People and Banks Get Expensive
1) Sellers (People)
You can get great deals… when they’re motivated.
But in strong markets:
- Sellers have options
- Prices are supported by demand
- Investors compete for the same deals
Result: Margins shrink fast
2) Banks (Foreclosures / REOs)
Banks used to be a major source of discounts.
Today:
- Many foreclosures go straight to the MLS
- Auctions are crowded
- Opening bids are set closer to market value
Result: You’re often bidding retail or close to it
Why Tax Deeds Can Be So Cheap
Here’s where things change.
When a property owner doesn’t pay property taxes, the local government steps in.
Eventually:
- The property is foreclosed by the county
- It’s sold at a tax deed sale
- The goal is simple: recover unpaid taxes
That’s the key difference.
The county is NOT trying to:
- Maximize profit
- Rehab the property
- Time the market
They are trying to:
- Collect back taxes
- Keep the system funded
What That Means for You as an Investor
Because of that goal:
- Opening bids are often just the back taxes owed
- There’s no emotional seller
- There’s no bank trying to recover a loan balance
That’s why you’ll hear rules of thumb like:
10% to 50% of After Repair Value (ARV)
And yes—those deals do exist.
But Here’s Where Most People Get It Wrong
This is where the internet loses people.
They hear:
“Buy properties for pennies on the dollar”
…and skip everything that actually matters.
Reality check:
Most investors lose money in tax deed investing.
Not because it doesn’t work—
But because they don’t understand what they’re buying.
Common Tax Deed Mistakes
❌ Buying the Wrong Property
- You thought you bought a house
- You actually bought:
- A strip of land
- A drainage easement
- A landlocked parcel
❌ Not Understanding Title Issues
- Liens may survive the sale
- Title may not be clean
- You may need legal work to fix it
❌ No Access or Control
- You don’t automatically get possession
- Evictions or legal steps may be required
❌ Bidding Against Other Investors
- Popular auctions get competitive
- Prices can climb quickly
Why Smart Investors Still Use Tax Deeds
Despite the risks, experienced investors keep using this strategy because:
✔️ There is less competition than retail deals
✔️ You can find true discounts
✔️ It’s one of the few places where price is not market-driven
But they approach it differently:
- They research parcels before bidding
- They understand local laws
- They treat it like a system—not a gamble
Tax Liens vs. Tax Deeds (Quick Note)
- Tax Liens → You buy the debt (and earn interest or eventually foreclose)
- Tax Deeds → You buy the actual property
Both can work—but they are not the same strategy.
The Bottom Line
Tax deeds can be the cheapest way to acquire property…
But only because:
- The seller (the county) is not profit-driven
- The pricing starts at back taxes, not market value
And only if:
- You know what you’re buying
- You understand the process
- You avoid the common traps
If You’re Serious About Learning This Strategy
This is one of those areas where:
- A little knowledge is dangerous
- And the right knowledge changes everything
If you’re going to explore tax liens or tax deeds, don’t do it from random posts or surface-level videos.
Learn how it actually works—
before you bid.
Jason Porter
Jason Porter is a longtime real estate investor and the “Tax Lien Tutor,” with nearly two decades focused on tax lien and tax deed investing, helping investors understand how to find and evaluate opportunities at tax sales.
