The practical difference in tax lien vs tax deed comes down to two things: how much cash you have and how long you can wait. A lien certificate can cost a few hundred dollars and pays you interest — or eventually the property — after a redemption period that can run six months to three years. A deed costs thousands and gives you the property the day the auction closes.
Ken Letourneau, who goes by the Tax Sale Master and has spent 15 of his 25 years in real estate focused on delinquent tax sales, buys both. He does roughly 100 properties a year nationwide, and he recently bought a Mississippi lien for a few hundred dollars on a property he valued near $250,000, alongside a Kansas deed at about $2,000 on a house worth roughly $150,000.
What follows is how he decides which auction to attend, what the wait actually costs you, why changing state statutes threaten lien holders far more than deed buyers, and how the exit works when you buy low enough to skip repairs entirely.
Key takeaways
- A tax lien makes you the lienholder, not the owner — Letourneau describes the position as being Bank of America on that property. A tax deed transfers ownership at the close of the auction, with the recorded deed arriving roughly 30 days later.
- Two questions decide your path: how much capital you have, and whether you’ll attend auctions in person or only bid online. Around $500 points you to lien auctions; $30,000 to $50,000 opens deed auctions.
- Lien interest rates can run as high as about 25%, but redemption periods of six months to three years mean your return is deferred. Volume of liens bought per year drives how many properties eventually come through.
- State tax sale statutes can change year to year. Once you hold the deed, a later rule change doesn’t reach you — with a lien or redeemable deed you’re exposed for the entire waiting period.
- Buying deeply enough removes the rehab question. Letourneau buys around $3,000, lists near $40,000 through a realtor, and does no repairs.
From the Real Estate Pros Show
This article draws on an interview with Ken Letourneau of Tax Sale Master on the Real Estate Pros Show, hosted by Scott Bursey.
What You Actually Own: Lien Certificate vs Deed
A tax lien certificate is a claim, not title. When a property owner fails to pay property taxes, the taxing authority either sells the lien on that property or sells the property itself — and which one happens depends on the state and the sale type.
Letourneau’s framing is worth borrowing because it settles the confusion fast: with a lien, “think about it like I’m Bank of America. My name is not on the property, but is it an asset? 100% it’s an asset.” You hold a control position. Nothing moves on that property until you’re paid off. But your name is not on the deed, you cannot list it, and you cannot rent it.
A tax deed is the other end. You buy the property for the delinquent taxes and you own it when the auction closes. On his Kansas purchase, he bought the property the day of the sale and received the recorded deed about 30 days later. That 30 days is administrative, not conditional — the ownership decision was already made at the gavel.
Some states also sell redeemable deeds, which behave like a hybrid: you take a deed subject to the former owner’s right to redeem within a statutory window. For risk purposes, treat a redeemable deed like a lien, not like a deed. You are still waiting on someone else’s decision.
The practical consequence: a lien portfolio is an interest-bearing asset that occasionally converts into real estate. A deed portfolio is real estate from day one. They are different businesses with different cash flow profiles, and it’s worth deciding which one you’re actually building before you register for an auction.
The Two Questions That Decide Which Auction You Attend
Letourneau asks everyone who comes to him with a clean slate the same two questions before he says anything about strategy.
- How much capital do you actually have? Not “some” capital. Is it $500 or is it $50,000? He says that single answer changes the entire path.
- Are you willing to attend auctions in person, or online only? Some counties still run live sales. If you won’t travel, your inventory shrinks to whatever is available on online platforms, and that narrows both your county selection and your competition profile.
The capital fork is sharp. With a few hundred dollars and no outside investors, you are going to a lien auction. His Mississippi example: he paid a few hundred dollars for a lien on a property he valued around $250,000. That’s a real position on a real asset for the cost of a phone. But he is careful to say what it is — “I’m just a lien on the property. I don’t own the property right now.”
With $30,000 to $50,000, deed auctions open up. In Kansas he bought a property outright for roughly $2,000 that he pegged at about $150,000 in value. Note the gap between $2,000 spent and $50,000 of capital: at deed auctions you want the ability to bid on multiple properties, cover unexpected competition, and carry the property through resale.
If you’re closer to the $500 end and want deeds, the honest answer is that you bring in investors or joint venture partners — which is exactly what his community structure does — or you build the lien portfolio first and let it fund the deed side later.
If you’re going to buy a tax deed on a property, you’re going to own the property at the end of the auction. So it doesn’t matter if they change the laws two weeks later or a month later, because you own the property. A lien could be a big, big difference, because you could wait six months, a year, two years, three years.
— Ken Letourneau, the Tax Sale Master
Timelines and Returns: Interest Now vs Property Later
Liens pay in one of two ways, and you don’t choose which. Either the owner redeems and you collect your principal plus interest — rates can run up to about 25% depending on the state — or the owner doesn’t redeem and the property comes to you for pennies on the dollar. Both outcomes are acceptable. Neither is fast.
Letourneau describes the wait plainly: “you could wait six months, a year, two years, three years, possibly to get the property or to get your interest rate.” Deeds skip all of it. You own the property at the end of the auction and can list it the following week.
The portfolio consequence is the part most beginners miss. Because he buys far more liens than deeds, his income for the next 12 months is already largely determined. The liens redeeming next year were bought two and three years ago. As he puts it, the key metric is how many liens you buy per year — the more you buy, the higher the likelihood properties come through.
Two things follow from that:
- A lien portfolio has a lag. Your first year is mostly buying, not collecting. Do not build a business plan that needs lien income in month three.
- Cash flow is variable, not consistent. Redemptions land when they land, and property sales close when they close.
His argument for patience is straightforward: property values have risen faster than property taxes, so the position you take today on a small delinquent tax amount can be worth substantially more when it finally resolves. The investor who needs money in 48 hours is buying deeds. The investor who can wait is buying liens.
Why Legislative Risk Hits Liens, Not Deeds
Tax sale statutes change. Letourneau names this as the primary threat to his business: “tax lien and tax deed investing laws can change yearly, or they may not change for a while. So that is one of the big things that you always want to keep in touch and saying, okay, what state has changed the rule and which state has not changed the rule?”
Tracking that across 50 states is real work, and it’s part of the job rather than a one-time setup task. He’s active nationwide, which means the research burden scales with geographic reach.
The distinction he draws is the useful part. If you bought a deed, a rule change two weeks or three weeks or a month later does not reach you — you already own the property. The transaction is complete. If you hold a lien or a redeemable deed, you are exposed for the entire redemption window, which may be years. A statutory change to redemption periods, interest rates, notice requirements, or surplus proceeds during that window lands on your position.
Recent legal developments have already affected the industry, and he tells people to stay current on what’s coming rather than what’s already passed. This is his operational read on risk, not legal advice — confirm the rules in any state you’re buying in with counsel who practices there, because the details of foreclosure procedure and notice are exactly where lien investors lose positions.
Practical takeaway: the longer your hold-to-resolution period, the more legislative exposure you carry. Price that into your lien buying, or concentrate lien purchases in states whose statutes you actually monitor.
Who You’re Bidding Against — and How the Exit Works
Hedge funds are very active in tax lien and tax deed auctions. That’s the single fact most beginners walk in without.
Letourneau’s stated most common mistake: showing up at an auction “with no experience or watching the basics and expect to compete with people who’ve been doing it for 10 or 15 years, or the large hedge funds.” Institutional bidders have research capacity, capital depth, and financing structures you don’t have on day one. In a competitive county, they will bid your margin away.
His answer is not to outbid them. It’s to buy at a price where the exit works regardless of what the market does. He buys around 10 cents on the dollar, and the resale is deliberately simple:
- Buy the property at roughly $3,000 at a deed sale.
- Do no repairs. At most, send a contractor to clean it up.
- Hand it to a realtor and list it around $40,000.
- Repeat roughly 100 times a year.
There’s no sales process to speak of because there doesn’t need to be. “It’s not hard because I’m selling it below everybody else.” The buyer takes the condition problem; that’s what the price reflects.
That basis is also his market-risk answer. “It really doesn’t make effect about if real estate is going up, if real estate is going down, if real estate going sideways — you’re buying them so low that anybody would purchase the property from you.” A rehab-and-retail flipper at 70% of ARV needs the market to cooperate. A deed buyer at 10 cents does not.
Financing a Lien Portfolio Through a Bank
A large lien portfolio can be borrowed against — and Letourneau says this is the mechanic he learned from watching institutional players, because it’s what hedge funds do routinely.
The structure he describes: if you hold, say, a million dollars of tax liens across roughly a thousand certificates, and you have an established relationship with the right bank, the bank will lend against those positions under an agreement. If a lien redeems, you take your principal and your interest. If it doesn’t redeem, the position gets assigned back. The bank is lending against a collateral pool of secured claims rather than against a single property.
Two qualifiers he states directly, and both matter: not all banks do this, and you have to have a relationship already built with a bank that will. This is not a product you shop for online. It is a commercial banking relationship developed over time, and it is available to portfolios of scale, not to someone holding four certificates.
His broader point is why he pursues banking relationships at all. The banking industry is among the wealthiest in the world, and what it does is lend against real estate. Investors who connect with bankers grow real estate portfolios faster than those who don’t. The hedge funds active in these auctions are borrowing bank money, deploying it into liens, and earning the spread.
For most readers this is a stage-three consideration, not a starting move. But it explains who you’re bidding against and why their cost of capital lets them accept returns you can’t. Build the portfolio first; the financing conversation comes after you have collateral worth talking about.
Frequently asked questions
Do you need to attend tax sale auctions in person, or can you bid online?
Both exist, and Letourneau treats it as one of the two intake questions he asks anyone starting out — because the answer determines which counties you can actually buy in. Some jurisdictions still run live in-person sales; others have moved online.
If you’re only willing to bid online, accept that your available inventory is smaller and that online platforms are where institutional bidders are most concentrated. Willingness to travel widens the pool of auctions you can work.
How long does a tax lien take to redeem before you get your money or the property?
Six months to two or three years, depending on the state. Letourneau’s own portfolio runs on roughly a two-to-three-year cycle, which is why his income for the next 12 months is largely already set by liens he bought years ago.
You don’t control the timing. The owner either pays the delinquency plus interest within the statutory window, or they don’t and the property becomes available to you. Plan cash flow around a lag, not a schedule.
Can you buy a tax lien with only a few hundred dollars?
Yes. Letourneau recently paid a few hundred dollars for a lien in Mississippi on a property he valued at around $250,000. Lien certificates are priced off the delinquent tax amount, not the property value, which is why the entry cost can be so low.
What you get for that money is a lienholder position, not ownership. You collect interest if the owner redeems, or you pursue the property if they don’t — but not on your timeline.
Do you have to rehab a property bought at a tax deed auction before reselling it?
Not if you bought low enough. Letourneau does no repairs at all on his deed purchases — he’ll send someone to clean a property up, then hands it to a realtor to list. He buys around $3,000 and lists around $40,000.
The condition discount is already priced into what he paid and what he asks. A buyer at $40,000 expects to handle the work. That only holds if your basis is genuinely at pennies on the dollar; buy closer to market and rehab becomes unavoidable.
Are tax lien laws the same in every state?
No. Rules differ by state and can change year to year — redemption periods, interest rates, whether the state sells liens, deeds, or redeemable deeds, and the procedures for taking title all vary. Letourneau names keeping track of which states changed their rules as one of the biggest ongoing threats in the business.
Verify current statutes with a local attorney before buying in a state you haven’t worked. This article describes an investor’s operational approach, not legal guidance.
The bottom line
Before you register for anything, answer Letourneau’s two questions honestly — what your capital actually is, and whether you’ll travel for auctions — then pick one state, learn its redemption rules and sale type cold, and buy there until you understand the cycle. Spreading thin across states you haven’t studied is how you end up bidding against hedge funds on positions you can’t evaluate.
