Can I get a mortgage on a property I bought at a tax deed sale?

Most conventional lenders won't fund a tax deed purchase at auction because title is not insurable at the moment of sale. You'll typically need cash or a hard money loan to acquire the property, then refinance after quiet title is complete and a standard title policy can be issued — usually 60 to 180 days post-purchase depending on the state.

What happens if the previous owner is still living in the property when I win the deed?

You own the property, but you cannot physically remove anyone without going through the formal eviction process in your state. The prior owner has no legal right to remain, but self-help eviction — changing locks without a court order — is illegal in every state and exposes you to liability. Budget 60 to 180 days and $2,000 to $8,000 for an attorney-managed eviction in states with tenant-protective statutes.

Do HOA liens survive a tax deed sale?

It depends on the state and the lien's priority relative to the tax deed. In Florida, HOA liens are generally subordinate to tax deeds and are extinguished at the sale. In other states, HOA super-liens may survive. Pull a full title search before bidding and specifically look for HOA recorded documents — the dollar amounts can be substantial, sometimes $10,000 to $30,000 on properties in communities with high monthly dues.

Is it better to focus on one county or spread bids across multiple counties?

Most profitable tax deed investors start with one or two counties until they know the local market values, typical repair costs, and the county's auction mechanics cold. Spreading across ten counties before you have a track record dilutes your due diligence time and increases the chance of overpaying. Depth in a smaller area consistently outperforms breadth in an unfamiliar one.

How do online tax deed auctions differ from in-person sales in terms of risk?

Online auctions through platforms like RealAuction or Bid4Assets eliminate travel costs but increase competition — bidders from across the country drive prices closer to retail in popular markets. You also lose the ability to observe competing bidders' behavior, which experienced in-person investors use to gauge interest levels. The due diligence requirements are identical; the competitive environment is often tougher.

Tax Deed Investing Pros and Cons

Tax deed investing can put you into real property at 40–70% of market value, but the same auction process that creates that discount also strips away most of the protections a normal real estate purchase gives you. That gap between price and value is real — and so are the traps that catch unprepared buyers.

Unlike tax lien investing, where you buy a certificate and wait for redemption, a tax deed auction transfers actual ownership of the property on the day you win. You're not earning interest. You're getting a deed, usually a treasurer's or sheriff's deed, that comes with specific limitations worth understanding before you bid one dollar.

You Can Buy Below Market — But the Discount Has a Source

The discounts at tax deed sales are not a mystery. Counties sell these properties to recover unpaid taxes, not to maximize sale price. A house worth $180,000 in Indianapolis might open at the delinquent tax balance — say, $4,200 — with a market-rate reserve in some states or no floor at all in others.

Georgia, Florida, and Texas all run competitive tax deed auctions where winning bids frequently land between 50% and 75% of assessed value. That spread is real money. On a $200,000 property, buying at 60 cents on the dollar saves you $80,000 compared to a traditional purchase — before any repairs.

The discount exists because the property comes without warranties, without inspections, and often without interior access before bidding.

The Title Problem Is the Biggest Risk You Face

A tax deed does not give you clean title. The county is conveying only the interest it acquired through the tax foreclosure, nothing more. Federal tax liens, IRS claims, and certain municipal liens can survive the tax deed sale entirely, depending on the state.

In practice, this means you cannot sell the property conventionally — most title companies won't insure a tax deed without a quiet title action first. In Florida, that process takes 60 to 90 days and costs $1,500 to $3,000 in attorney fees. In Illinois, expect 4 to 6 months and $3,000 to $5,000. Budget for it before you bid.

Some investors buy title insurance policies specifically designed for tax deed acquisitions, but underwriters often require a waiting period of one to three years post-deed before they'll issue a policy.

Warning: Federal IRS liens are not extinguished by a state tax deed sale unless the IRS received proper notice and the required 120-day redemption period ran. If you're bidding on a property with a federal lien recorded at the county, verify the IRS was notified before that sale — or you may inherit the lien. Check the county recorder's index and the federal tax lien register at your local district court.

Redemption Periods Can Delay Your Plans

Some states that appear to run tax deed sales actually have a post-sale redemption window — a period after the auction during which the prior owner can reclaim the property by paying off the taxes plus penalties.

Michigan gives the original owner 6 months to redeem after a tax deed is issued. Georgia's tax deed carries a 12-month right of redemption that entitles the redeeming party to the property back in exchange for paying your purchase price plus a 20% penalty. That 20% sounds attractive, but it means you might hold a property for a year, unable to renovate or sell, only to have it redeemed and walk away with a return rather than a property.

Always research the redemption rules in your target state before you treat a winning bid as a done deal. A good starting point is the Georgia tax deed state guide on Tax Sale Ninja, which breaks down the exact timeline and redemption statutes.

Property Condition Is an Unknown

You almost never get inside a tax deed property before bidding. The prior owner may have lived there, or may have vacated years ago. Occupied properties add an eviction cost — in states like New York or California, that process alone can run $3,000 to $8,000 and take 3 to 6 months.

Vacant properties carry their own problems: stripped copper, broken HVAC, foundation issues, mold. A house that looks clean from the curb can need $40,000 in repairs. Build a conservative repair buffer into every maximum bid you set — at least $15,000 to $25,000 for unknown condition on any property under 1,500 square feet.

The Due Diligence Window Is Short

Most counties post their tax deed auction lists 2 to 4 weeks before the sale. That sounds like enough time, but between verifying the legal description, pulling the title chain, checking for federal liens, driving the property, estimating repairs, and calculating your maximum bid, two weeks moves fast.

Experienced investors pre-screen counties before lists drop. They know which zip codes they'll bid in, have a title attorney on retainer, and use a consistent spreadsheet to cap their bids at a formula — typically 65% of after-repair value minus estimated repairs minus holding and closing costs. Stick to a number. Auction rooms and online bidding platforms both create pressure to go one more increment. Discipline on your maximum bid protects your margin.

The Actual Upside When You Execute Correctly

When the title clears, the condition is manageable, and you bought at a genuine discount, the returns are strong. Investors who buy tax deeds consistently in competitive states like Texas and Florida report net margins of 25% to 40% on flips after accounting for quiet title costs, repairs, and holding time. Rental acquisitions bought at tax deed sales in secondary Midwest markets — Dayton, Ohio or Peoria, Illinois, for example — can produce cap rates of 10% to 14% on purchase price, numbers that are essentially unavailable through the MLS.

The math works. The execution requires patience, a tight process, and the willingness to walk away from any property where the numbers don't pencil before you ever raise a paddle.