Investing in tax deed is basically the same deal with tax liens. Homeowners who do not pay their property taxes would also face the consequence of losing their home. But instead of the county placing a tax lien on their property, the government actually sells the deed. That is why in tax deeds investing you do not get interest on your money but acquire ownership of the property, free and clear. You can then make more profits by selling the property at a market value.
If you do your due diligence, finding tax deed properties can be rewarding before they even get to a county auction. You can purchase these properties directly from the homeowners for pennies on the dollar. Avoid the hassle of joining a tax deed sale.