The Investor’s Checklist for First-Time Tax Deed Buyers in Texas

Buying a property at a Texas tax deed auction can sound exciting—low starting bids, real estate backed by court orders, and the chance to own property outright. But if you’re new to the process, it can also feel overwhelming.

The truth is, tax deed investing is not complicated once you understand the steps. With the right preparation, you can avoid costly mistakes and make informed decisions.

This article gives you a clear, step-by-step checklist designed for first-time Texas tax deed buyers.

Why You Need a Checklist

Texas tax deed auctions follow strict legal procedures. Missing a step or misunderstanding the rules can lead to:

• Bidding on a property that’s not worth the price
• Getting stuck with liens or other legal issues
• Losing your deposit for not following payment deadlines

A checklist keeps you on track and helps you focus on properties that fit your goals.

Step 1: Learn the Basics of Texas Property Tax Law

Before you even look at properties, understand how Texas handles unpaid property taxes.
Key points:

• Texas is a judicial foreclosure state, meaning the sale is ordered by a court.
• Auctions are typically held on the first Tuesday of each month in all 254 counties.
• Redemption penalties are set by law—25% for redemptions within 180 days, 50% for certain properties redeemed within 2 years.

Why this matters: Knowing these rules helps you predict timelines and potential returns.

Step 2: Find Upcoming Auctions

Each county publishes a list of upcoming sales, often called a delinquent tax sale list.
You can find these:

• On county websites
• In local newspapers
• Through third-party auction platforms

Tip: Make sure the list you’re using is current—properties can be removed if owners pay their taxes before the sale.

Step 3: Understand Redemption Periods

Not every property is immediately yours to keep after the sale. In Texas:

• Most non-homestead properties: 180-day redemption period
• Homestead or agricultural properties: 2-year redemption period

During this time, the previous owner can buy back the property by paying you the winning bid amount plus the penalty set by law.

Step 4: Research the Property

This is one of the most important steps. Before you bid:

1. Check the property’s location – Look at maps, nearby development, and neighborhood conditions.
2. Look for visible issues – Roof damage, structural problems, or overgrown lots can affect value.
3. Review the legal description – Make sure you’re bidding on the right parcel.
4. Check for other liens – Some liens (like certain federal liens) may survive the tax sale.
   

Step 5: Set a Budget

It’s easy to get caught up in auction excitement. Decide before the sale:

• The maximum amount you’re willing to bid
• Whether you’ll need cash immediately (most counties require payment quickly after the auction)
• Extra funds for possible repairs, insurance, or securing the property
  

Step 6: Attend or Register for the Auction

In Texas, some auctions are in-person at the county courthouse, while others are online.

• If in person: Arrive early, bring ID, and have the required deposit ready.
• If online: Register in advance and verify payment methods.
  

Step 7: Bidding at the Auction

• Bids start at the opening bid (back taxes + penalties + fees).
• Increases are usually in set increments.
• If you win, you’ll sign paperwork and arrange payment according to county rules.

Tip: Don’t bid more than your pre-set maximum, even if other bidders push the price up.

Step 8: Pay and Get Your Sheriff’s Deed

After you win:

• Pay the full amount within the county’s deadline (often the same day or within 24 hours).
• The sheriff’s office will prepare your deed and file it with the county clerk.
• You’ll receive your recorded deed by mail or in person.
  

Step 9: Plan for the Redemption Period

If the property has a redemption period:

• You can’t sell it as free-and-clear until that period ends.
• If the previous owner redeems it, you’ll receive your purchase price back plus the statutory penalty.

Step 10: Decide Your Exit Strategy

After the redemption period (or immediately, if there is none), decide whether to:

• Sell the property
• Rent it out
• Hold it for future appreciation

Common Mistakes First-Time Buyers Make

• Skipping title research – You might inherit unwanted liens.
• Overpaying – Reduces your potential return.
• Not budgeting for upkeep – Even vacant land can have maintenance costs.
• Forgetting the redemption period – Limits immediate use or resale.
  

Example: How the Checklist Works in Practice

Imagine you find a vacant lot in Bexar County with an opening bid of $5,000.
Following the checklist:

1. You confirm it’s in a growing area.
2. You check county records for liens—none are found.
3. You set a maximum bid of $8,000.
4. You attend the auction, win at $7,500, and pay the same day.
5. You receive your Sheriff’s Deed a week later.
6. Because it’s not a homestead property, the redemption period is 180 days.
7. At the end of 6 months, the previous owner has not redeemed. You now own it free and clear and decide to sell it for $15,000.

Key Takeaways

• Texas tax deed investing has clear rules and steps—follow them carefully.
• Doing research before bidding is critical to success.
• The Sheriff’s Deed is your legal proof of purchase, but redemption periods can delay full ownership.
• Discipline and preparation protect your investment.

Final Word

If you’re new to tax deed investing in Texas, this checklist can guide you from research to resale. While the process is structured, each property is unique—so take your time, understand the risks, and make decisions based on solid information.

 

Disclaimer: This article is for educational purposes only and does not constitute an offer to sell or a solicitation to buy securities. Investments with Core Tax Deeds are made through a registered Regulation Crowdfunding (Reg CF) intermediary and are subject to offering terms and investor eligibility. Past performance is not indicative of future results. Please consult your financial advisor before making investment decisions.