Tax liens in a changing economy require a slightly different playbook—because interest rates, delinquencies, and competition don’t stay constant.
When the economy shifts, most investors panic. Tax lien investors? We adapt.
Inflation, rising rates, recessions, booms. They all affect the game differently. Here's how investors adjust and keep winning.
When Inflation Rises (Like 2022-2024)
What happens:
- Property values climb (sometimes artificially)
- Property taxes increase
- More owners struggle to pay
What it means for you:
- More liens available at auction
- Your lien-to-value ratios improve automatically (your $10k lien on a property now worth more)
- Redemption rates may dip slightly (owners under financial pressure)
How to adapt: Stick to properties with strong equity cushions. Avoid overleveraged areas where values might be corrected, hard.
When Interest Rates Spike
What happens:
- Borrowing gets expensive
- Home sales slow
- Some owners can't refinance
What it means for you:
- Liens take longer to redeem (owners waiting for better rates)
- Your interest keeps accruing in some areas (more profit if you're patient)
- Fewer investors competing at auction (many are scared)
How to adapt: Embrace longer hold times. Budget for 18-24 month redemptions instead of 12. The extra interest makes up for the wait.
When the Economy Tanks (Recession)
What happens:
- Job losses increase
- Foreclosures rise
- Property values drop in weak markets
What it means for you:
- Huge lien inventory (opportunity)
- Lower redemption rates (more potential deed acquisitions)
- Less competition (nervous investors pull back)
How to adapt: This is when you hunt. Focus on stable counties with diversified economies. Avoid one-industry towns. Be ready to foreclose and hold if needed.
When the Economy Booms
What happens:
- Everyone's paying taxes
- Fewer delinquencies
- More competition at auctions
What it means for you:
- Smaller lien inventory
- Sky-high redemption rates (great for passive income)
- Bidding wars drive down yields
How to adapt: Accept lower returns but higher certainty. Focus on volume and quick turnover.
The Universal Truth
Every economic cycle creates opportunity. You just need to know what you're playing for:
- Good times = high redemptions, passive income
- Tough times = deed opportunities, patient capital wins
The investors who thrive aren't the ones hoping for perfect conditions. They're the ones who read the room and adjust their strategy accordingly.
The economy changes. Smart investors adapt.
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.
