Tax Lien Basics from an Expert

Hogan School of Real Estate
4023 E. Grant Rd
Tucson AZ 85718


Tax lien season is just around the corner! To help those who are interested in getting started with this exciting investment opportunity, we held a Q&A with our resident tax lien expert, Jim Hogan. 

Jim has been investing in tax liens for more than 35 years!

Q: Can you give us an overview of tax liens?
A:  In Arizona, if property taxes are not paid, the County Treasurer will sell the delinquent lien at public auction. Tax lien certificates are sold to investors to recover the delinquent property taxes owed by the property owner. Investors are permitted to bid on each tax lien via auction. The winning bidder is the person who is willing to accept the lowest interest rate if the property owner redeems the lien. Bidding starts at 16% and can potentially go all the way down to 0%. Bids may be made in 1 percent increments and a “zero” interest bid will get the bidder the certificate with no interest. The certificate (CP) only represents a tax lien on the property, it does not mean that the certificate holder is the new property owner, nor does it mean the certificate holder is promised ownership of the property. The successful bidder at the auction may eventually foreclose the lien and acquire the property if the property owner does not redeem by paying the CP amount plus interest.

Q: What is the goal of buying a tax lien?
A: There are two reasons a person invests in tax liens: 1). To obtain ownership of a property through foreclosing the lien; or 2). To obtain a high rate of interest on the amount invested. 

It’s important to note, statistically speaking, most tax liens are redeemed by the owner. 

Q: What are the advantages of investing in tax liens vs. a certificate of deposit?
A: The advantages of investing tax liens compared to other investments include the fact that they’re in the highest lien position, have a higher rate of return, are a relatively short-term investment, and both small and large liens are available.

Q: What is something that someone who is participating in a tax lien auction for the very first time might not know?
A: Not all liens are purchased each year because there are good reasons not to invest in certain properties. Around a third to a half of the tax liens that are offered up for auction never get sold. Why? These properties may have environmental issues, are HOA common areas, are low-value land subdivisions, or have other problems where, unless you specialize in those property types, it’s best to steer clear.

Q: What’s the biggest piece of advice you can give to newcomers?
A: Do your research! Look at the assessor’s or treasurer’s website to review the records and properties up for the tax lien auction. Make sure you’re not purchasing one of the above-mentioned cautioned properties. You can usually click to see the aerial view of the property online or Google Street View to get a better idea of the property.

Q: What’s the most important thing you can tell someone who is getting started in tax liens?
A: As mentioned above, tax liens have the highest priority of all liens, making the investment incredibly safe, so long as you do a little due diligence.

With a little research, tax liens can be a strong, safe investment. To register and find the most up to date information for your county’s tax lien auction, visit your county treasurer’s website.

Make sure you’re prepared for auction day! Join Jim Hogan for his upcoming tax liens course:

How to Buy Tax Liens
3 hrs. RE Legal Issues Credit
Time: 9am – 12pm
Tuition: $35

  • Scottsdale: Friday January 14th
  • Livestream: Thursday January 27th
  • Hogan-Tucson Campus: Wednesday February 2nd