A balanced tax lien portfolio helps you avoid relying on one county, one property type, or one outcome.
Most new investors make the same mistake: they find one county they like and dump all their money there.
Then that county changes its redemption laws, or the local economy tanks, or competition floods in. Suddenly their entire portfolio is at risk.
Balance isn't boring. It's how you survive and thrive long-term.
The Three Pillars of Portfolio Balance
- Geographic Diversification (Spread Across Counties and States)
Don’t put more than 30% of your capital in a single county. Ideally, spread across 3-5 different counties or 2-3 states.
Why? Each county has different:
- Redemption rates
- Interest rates
- Economic conditions
- Auction competition
Illustration: ‘Marcus’ had $60k concentrated in one Michigan county. When automotive layoffs hit, redemptions dropped from 85% to 52% in one year. He's still waiting on $28k tied up in slow liens. Now he spreads across Iowa, Arizona, and Florida.
- Property Type Mix (Residential Anchors Your Portfolio)
Target allocation:
- 70-80% single-family residential (high redemption, steady returns)
- 10-20% multi-family or commercial (higher risk, higher potential)
- 0-10% vacant land (if you know the area well)
Residential properties redeem most consistently. Use them as your foundation.
- Redemption Timeline Stagger (Keep Cash Flowing)
Don't buy all 12-month liens or all 36-month liens. Mix it up:
- 40% short redemption (6-12 months)
- 40% medium redemption (12-24 months)
- 20% longer redemption (24-36 months)
This creates steady cash flow. As short-term liens redeem, you reinvest while longer ones keep accruing interest.
What Balance Looks Like in Real Numbers
$50k portfolio example:
- $15k in Iowa (high redemption residential)
- $12k in Arizona (medium redemption residential)
- $10k in Florida (mix of residential and strategic deed plays)
- $8k in Indiana (short-term redemptions)
- $5k in strategic opportunities (commercial or land you researched heavily)
The Simple Balance Test
Ask yourself:
- If one county stopped redeeming tomorrow, would I be okay? (If no, you're too concentrated.)
- Do I have liens redeeming in different quarters? (If no, stagger your purchases.)
- Am I mostly in property types I understand? (If no, simplify.)
Balance doesn't mean you need 50 tiny liens across 20 states. It means you're protected against any single point of failure while maximizing your chances of consistent returns.
Balance beats bold. Spread your risk healthfully.
This blog is for informational purposes only and should not be relied upon as financial or investment advice. Real estate investing carries risks, and individual results will vary. Always consult with your team of professionals before making investment decisions. The authors and distributors of this material are not liable for any losses or damages that may occur as a result of relying on this information.
