We all know that if someone doesn’t pay their mortgage the bank will foreclose on the property and take it from them. What you may not know is that in the US, if a property owner doesn’t pay their property taxes, the government has the right to foreclose on a property and sell the property to collect back taxes.
Investors attend auctions to buy these Tax liens and Tax deeds. In the case of a Tax Lien auction an investor will buy this lien and the owner has a period of time to pay off the back taxes plus interest. If not, the investor can foreclose on the property and take possession. In the case of a tax deed the owner has already lost their opportunity to keep their house, the investor who wins the tax deed auction will own the property. This type of investing can be highly lucrative and highly risky, there is a lot of competition in this space and a lot of pitfalls to be avoided before you cash in big.
Now this is a very high level overview and there are many rules and situations governing and affecting this process. But in a nutshell this is Tax Lien/Tax Deed investing.