Two of the three states that have the highest return on investment for tax lien investing are not even tax lien states. They are the redeemable deed states Georgia and Texas. What makes them so attractive to tax lien investors are the high interest rates and shorter redemption periods.

In these states the interest rate is not bid down, instead the price of the deed is bid up. And unlike tax lien states where if you do pay premium for the lien, you do not always get your premium back (this depends on the state). And if you do get your premium back when the lien redeems, in most tax lien states you do not receive interest on the premium. However in Texas and Georgia in order to redeem the deed the delinquent tax payer must pay the penalty on the total amount the investor paid for the deed. So the investor gets his or her original investment back plus 20% (in Georgia) or 25% (in Texas).

The redemption times are also shorter than most tax lien states. In Georgia the redemption time is one year and in Texas on non-homesteaded and non-agricultural properties the redemption time is only 6 months. Contrast that to the higher rate tax lien states – Illinois and Arizona have redemption periods of 3 years, and Florida and New Jersey have redemption periods of 2 years.

The drawback to investing in these states is that they do not have online tax sales. Unlike some Arizona counties and most Florida counties, you have to show up to bid at the tax sale. So how can you take part in these highly profitable tax sales without spending too much money on travel to do your due diligence and attend the tax sale? There are actually a couple of ways that you could invest in these states without having to travel to them.

While you have to physically show up at the tax sale, or have an agent show up for you, you can do most of your due diligence online for the properties in the tax sale. Many of the counties now have online resources that let you look up the tax assessment data online, do a title search online, and even get a description and picture of the property. You can also find a local realtor who knows the area and can drive by the properties and take pictures of them for you. They can even go to the tax sale and bid on the properties for you. You do have to have someone physically bid for you at the tax sale, but it doesn’t have to be you that does the bidding. You can find a realtor who will do this for you with the understanding that if you purchase a deed and wind up with the property they will be the one that will get the listing. Continue reading →