Basic Investing Insights

Buying Tax Liens in Texas an Investing Guide

Rachel Seidensticker
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Introduction to Buying Tax Liens in Texas

In the state where everything is bigger, investors should expect no less with Texas tax liens.

Tax liens in Texas come with nuances, pitfalls, and tough competition. Therefore, individual investors entering the market must have equally robust knowledge and financing to succeed.

Fortunately, Tax Sale Resources has helped Texas-based investors with tax liens for years.

Our research tools give you the breadth of understanding necessary to make informed investments, and our financing can kickstart your portfolio, boosting your returns to new levels.

This guide will outline winning strategies for Texas tax liens and the steps to win at your next auction.

Nuances to Investing in Tax Delinquent Properties in Texas

While investors often consider Texas a tax lien state, closer examination reveals it as a redeemable deed state.

Texas auctions off liens with redemption periods, meaning the owner has a limited time to pay their delinquent property taxes.

At the end of this redemption period, investors have a chance to own the property.

So, investors generally bid intending to own the real estate because the lien turns into a redeemable deed.

Another detail affecting the redemption period is the type of property. Specifically, if the property is not a homestead, the owner has a six-month redemption period. But if the property is a homestead, the redemption period is two years.

Therefore, buying a tax lien for a certain home will change your timeline for obtaining ownership.

How do Tax Liens Work in Texas?

Understanding tax liens in Texas means starting at the beginning: the auction.

The opening bid will rarely be the final price of the lien because multiple investors will drive up the price in their attempt to purchase the underlying real estate asset.

In other words, the opening bid isn’t the price tag; it’s the starting point.

The competition is so stiff during the typical auction that you must bid as if you’re purchasing the property.

Therefore, knowing your upper limit will help you bid effectively on tax liens that appear affordable at the opening bid.

In addition, investors can obtain liens through lien loans. For example, a company will provide a loan to a delinquent homeowner to help them catch up on their taxes. In return, the company receives a lien as collateral for the loan.

If the homeowner fails to repay the loan, the company can start the foreclosure process. 

The foreclosure period ends with a redeemable deed auction in Texas. After a bidder or lien holder wins the redeemable deed, the redemption period begins, in which the owner has time to redeem the property.

As stated previously, the period is six months for non-homesteads and two years for homesteads. Once this period expires, the owner loses their chance to reclaim the home, and the investor can obtain the title to the property.

Remember, redeemable deeds and foreclosures require legal documentation and processing, so attorneys are involved in most tax lien situations.

As a result, having a close relationship with a knowledgeable attorney is vital for tax lien investors in Texas.

Some attorneys specializing in Texas tax liens can be found at the bottom of the Texas State Directory page.

Things to Look Out for When Buying Tax Liens in Texas

Buying a tax lien in Texas doesn’t mean obtaining a clear title at the end of the process.

Even if you obtain a redeemable deed, numerous circumstances may lead to you only getting an insurable title because of a defect in the property.

Municipal laws influence the title you receive, and the flaw may be as simple as an uncut lawn.

Therefore, it pays to be well-versed in what affects property titles in your area and act preemptively if you receive an insurable title.

Generally, this means consulting an attorney to ensure you grasp all the facts.

Strategies to Buying Tax Liens in Texas

Whether seasoned or new, individual investors can augment their efforts through two strategies.

First, it’s best to avoid urban areas. City tax liens attract institutional investors with huge amounts of capital. The trade volume and competition are higher, meaning individual investors struggle to win bids.

Staying on the periphery of urban areas – the suburbs and the rural areas hugging the edges of the metro regions – will expose you to winnable bids.

Second, stay abreast of local auction days. Texas holds tax lien sales on the same day, and institutional investors don’t have the personnel to be present at every auction.

So, attending auctions in less populated areas reduces your chances of running into business-backed investors and losing bids. In other words, investment firms focus on high-concentration areas at the cost of ignoring pockets of activity outside of urban areas.

You can take advantage of their limited reach by attending sales in secluded areas on auction day.

To that end, Tax Sale Resources helps you select the sales you’ll hit on auction day. Our research tools allow you to underwrite the whole state.

For instance, if you're after residential real estate valued at $350,000 or higher in rural areas, the website’s tools can narrow down the list of available auctions and let you know which ones give you the best chance to purchase your desired property type.

As a result, you can evaluate the entire state each month before auction day and plan your approach. 

How to Use Financing to Grow your Texas Investing Portfolio, and Why It’s a Great Fit

Financing Strategies for Texas Tax Liens
Financing for Texas Tax Liens

The typical financial pain point for investors in redeemable deed states like Texas is the redemption period.

Specifically, investors can’t obtain bank financing or title insurance during the redemption period.

So, you might tie up your cash for six months to two years, depending on the property type. This circumstance can limit your growth once you’ve sunk your money into a few tax liens.

Fortunately, Tax Sale Resources has geared its financing program for these situations.

Our understanding of tax sales and redemption periods makes us suitable partners for providing capital while you wait for an insurable title. As a result, you can pursue more tax sales while waiting for the redemption period on your past investments to expire.

Tax Sale Resources’ unique financing service can help scale your investment ten times what it would be without the cash injection.

What is the Tax Lien Buying Competitive Environment in Texas?

While Texas’ trade volume might not compare to Florida’s, the state is still rife with competition.

For instance, hundreds of investors swarm the sales in Dallas, Austin, and Houston on auction day.

Bids will send lien prices sky-high in metro areas, meaning properties will be well out of the average investor’s reach.

Therefore, individual investors have better chances in rural counties, which receive less attention from investment firms.  

Step-by-Step Walkthrough of Buying Tax Liens in Texas

New investors can become overwhelmed by the information and details about investing in tax liens in Texas. Here’s a list of steps that can keep you focused while handling the curveballs that may come your way:

Buying Tax Liens in Texas a Step by Step Investing Guide
Buying Tax Liens in Texas - Step by Step Guide

Step 1) Research the available properties on the Tax Sale Resources database. You can find the coming month’s auctions and schedule your auction day activity.

Step 2) Inspect the properties that draw your interest. Not every property is a slam dunk, so it’s wise to do your homework before investing. For instance, a charming home in a suburb may have recently been demolished.

Step 3) Run the automated valuation model with Tax Sale Resources’ research tools.

Step 4) Once you’ve narrowed down your list of properties and understand the pricing, prepare the capital for the bids you plan to make.

Step 5) Personally attend the relevant auctions and place your bids.

Step 6) Rinse and repeat the next month with the available financing opportunities from Tax Sale Resources.

Frequently Asked Questions

How do you look up tax liens in Texas?

You can look up local tax liens by searching Texas’ online tax lien database.

You can also use Tax Sale Resources to distinguish the best tax liens, acquire county contact details, and organize your portfolio on its nationwide management platform.

What are tax lien interest rates in Texas?

Investors can earn up to 25% on tax liens in Texas during the first year of the redemption period. If the property owner enters the redemption period’s second year, rates can rise to 50%.

Is Texas a tax deed state?

Texas issues tax liens that enter redemption periods, meaning the owner has six months to two years to pay back delinquent taxes, depending on the property type. If the redemption period expires, Texas gives investors the chance to acquire the property.

As a result, Texas is a hybrid state with redeemable deeds.


Buying tax liens in Texas means you can own properties at the end of the redemption period.

Remember, non-homestead properties have a six-month redemption period, while homesteads have two years before you can acquire the deed.

In addition, cities have hundreds of institutional investors bidding on properties, inflating prices beyond the abilities of typical individual investors.

Therefore, sticking to less populated areas can help you purchase liens at reasonable prices.

Plus, Tax Sale Resources’ financing services can enable you to purchase more assets and exponentially grow your portfolio.

Author - Rachel Seidensticker
Rachel Seidensticker
Chief Operations Officer
In the Tax Sale Industry Since 2010
Rachel is responsible for managing and overseeing the daily operations of Tax Sale Resources, which produces data for approximately 8,000 nationwide tax sales yearly. She started in the tax sale industry originally as an investor but decided to change course and team up with her brother (Brian Seidensticker) to build Tax Sale Resources quickly thereafter.

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