The Back Door To US Real Estate – Tax Sale Strategy

#EntrepreneurOfTheWeek – Post #2

The backdoor into U.S. real estate – The Tax Sale strategy

This week I want to take you a bit behind the scenes of one of the most interesting strategies in the American real estate world—one that combines law, bureaucracy, and unique profit opportunities: Tax Sale.

As an entrepreneur, I believe real profit exists where most people aren’t looking.

While most investors search on the MLS or through off-market deals, we look דווקא at the “failures” in the system.

So what is a Tax Sale?

When a property owner in the U.S. doesn’t pay property taxes, the county has the right to act—either by selling the debt to investors or by selling the property through auctions.

Instead of dealing with collections or managing the property, the county auctions it off and allows investors to step in.

The investor essentially steps into the shoes of the authority and can profit either from interest or from acquiring the property—depending on the type of deal.

Everything is handled through the county: notifications, collections, and enforcement.

On one hand, the county receives the money it needs to fund services like roads, schools, and police.
On the other hand, investors get an opportunity.

The two main paths:

1. Tax Lien – the more passive route
We purchase the property owner’s debt. The government guarantees a fixed interest rate by law (which can reach 18%, 24%, and even 36% annually).
If the owner pays, we earn interest.
If they don’t—we can foreclose on the property.

2. Tax Deed – the more active route
Here, we’re dealing with the property itself. The county sells the property at auction to cover the debt, and this is where you can find properties at significant discounts—sometimes tens of percent below market value.

Why is this a strategy for real entrepreneurs?

There’s a knowledge barrier to entry.
It requires market analysis (due diligence), understanding state laws, and patience. Because of that, competition is lower—and there’s a strong advantage for those who know how to operate correctly.

From a security standpoint:
The investment is backed by a physical asset. The government enforces the process on your behalf.

Low capital requirement:
You can start investing in Tax Liens with relatively small amounts (a few hundred or thousand dollars) and gradually build a portfolio.

But it’s important to understand:
In Tax Sales, the key isn’t just “how much money you have”—it’s how much research you did before clicking the bid button.

Behind every good deal, there’s real work:

• Location and demand analysis
• Checking for additional liens
• Understanding state laws
• Evaluating the property (even remotely)

Because “cheap” doesn’t always mean “good.”

To understand the potential, here’s our strategy:

Our approach is simple—buy cheap and sell cheap.

But “cheap” is relative. We’re not looking for the absolute cheapest deal, but for properties purchased below market value and sold at a price that’s still attractive to the next buyer.

This allows us to sell faster, generate profit, and remain competitive.

In addition, in some deals we provide financing to buyers (through Land Contracts or Owner Financing).
This way, we don’t just sell the property—we also create ongoing monthly cash flow.

And that’s what I love most about this strategy—it’s a win-win deal.

The buyer gets an affordable property with financing options, and we generate both profit and cash flow.

How do I approach it?

I don’t see Tax Sale as a “magic method,” but as a tool within a broader strategy.

Some deals are suitable for interest.
Some are suitable for taking over the property.
And some—we simply don’t touch.

The difference is in the selection.