There are as many methods for purchasing tax deeds and tax certificates as there are states in the U.S., probably as many as there are counties. With the fence of lingo and mumbo-jumbo that all of the local tax authorities have surrounded themselves with, however, there's really only one goal: ACQUIRING PROPERTY.

The single most important thing to take out of this part is that almost everywhere in this country, using this system, there are opportunities to make FANTASTIC PROFITS by acquiring real estate property for A TINY INVESTMENT at LITTLE OR NO RISK!

Here's a recap of the final grades for each of the systems we have covered:

1. “PUBLIC ORAL BID FORECLOSURE AUCTION”

OR “DEED” TAX SALE

Arkansas, California, Florida, Idaho, Kansas, Nevada, New Mexico, New York (in some cases), North Carolina, Ohio (in some cases), Pennsylvania, Utah, Virginia and Washington.

PROS

• Low Opening Bid . Usually the cost of the back taxes, plus administrative costs and penalties!

• First Lien . Many states consider property tax liens as priority to all other liens, wiping out any secondary ones!

• Great Equity . A first lien may mean gigantic profits and huge equity for pennies on the dollar!

• Free and Clear . Generally, once you have the deed in your hand, it's yours. No messy contact or litigation from previous owners.

CONS

• Competition . The fact that the state holds an oral bid auction (i.e., in public) means others attending the tax sale might want the same properties you're looking at, possibly driving up the bid.

FINAL GRADE: A-

2. “PUBLIC ORAL BID AUCTION” TAX SALE

Alaska, Maine, Oregon, Minnesota, Wisconsin, plus some improved properties in New Mexico and New York.

PROS

• First Lien . Many states consider property tax liens as priority to all other liens, wiping out any secondary ones!

• Free and Clear . Generally, once you have the deed in your hand, it's yours. No messy contact or litigation from previous owners.

• OK Equity . A first lien can still mean big profits and great equity, as you are acquiring the property with all other liens discharged!

CONS

• Competition . You still run the risk of competitive investors driving the price of the property up.

• Higher Opening Bid . Not usually the cost of the back taxes, plus administrative costs and penalties! Generally these state offer their counties the ability to set opening bids at higher or much higher levels.

FINAL GRADE: C-

3. PUBLIC ORAL BID TAX CERTIFICATE SALE

Essentially, Alabama, Arizona, Colorado, Florida, Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Mississippi, Missouri, Montana, Nebraska, New Jersey, North Dakota, Oklahoma, South Carolina, South Dakota, Vermont, and Wyoming. California, New Hampshire, Ohio, and New York allow tax certificate sales, but they're not universal.

PROS

• Huge Interest Rates. 16% is not unusual; can go up to 240%.

• PROPERTY OWNERSHIP . Chance to acquire property!

• First Lien . Many states consider property tax liens as priority to all other liens, wiping out any secondary ones!

• Free and Clear . Generally, once you have the deed in your hand, it's yours. No messy contact or litigation from previous owners.

• Great Equity . A first lien wiping out all secondary liens on the property means it's very possible to acquire HUGE equity in the property secured by the tax lien, upwards of 95% EQUITY!

• Lack of Popularity . Not as many investors to bid away your profits!

CONS

• Competition . Competitive bidding can have all sorts of impact on the price of the certificate. Bidding down interest or property ownership and bidding up price can mess with your profits! Do your due diligence. Know the local rules and customs BEFORE you start bidding.

• Redemption Period . They can last from months to years. But you're wait can be well worth it, if the property owner doesn't redeem the property, and it becomes yours!

FINAL GRADE: A-

4. BUYING TAX CERTIFICATES “DIRECT”

Alabama, Arizona, Colorado, Florida, Kentucky, Maryland, Montana, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Wyoming.

PROS

• No Competitive Bidding . Buying over-the-counter means completely avoiding competitive investors driving down your profits!

• First Come, First-Served. No lines, no random selection, no other investors around to cloud the issue. You walk in (or even call on the phone!), and choose from the array. Since there is no competitive bidding, there is no difficulty in acquiring the tax certificates you desire.

• Year-long Access. You can buy for much of the years as opposed to on only one day!

• Shorten the Redemption Period. Buying certificates late into the redemption period reduces your waiting time before you can acquire the property attached to the certificate!

• Better Service. Local tax staff is far more likely to be helpful and non-frazzled when selling certificates over-the-counter, as opposed to during the mayhem of a public oral bid tax sale.

CONS

• Minimal . If you do your due diligence and homework, buying tax certificates “direct” can be an excellent strategy for fantastic profits from a tiny investment for little or no risk!

FINAL GRADE: A+!

SO NOW WHAT?…

But now that you understand the opportunities out there, how do you reap the rewards? What do you look for in a property? How do you bid at an auction? How do you avoid competitive bidding?