If you’re diving into tax lien investing, you might have at some point wondered “which states have the shortest tax lien redemption periods?”. Knowing this type of information can help you get quicker returns on your investments.

Why Redemption Periods Matter

When you buy a tax lien, the property owner has a set time to pay off the debt. This is the redemption period. Shorter redemption periods mean you can earn a faster return on your money and ultimately move on to your next investment much faster.

Below is a list I’ve compiled of 5 states that have the shortest redemption periods in the union.

(as of July 2024)

Top 5 States with the Shortest Redemption Periods

1. Maryland

Image Credit: https://en.m.wikipedia.org/wiki/Flag_of_Maryland

Maryland offers property owners a redemption period of just 6 months. This is one of the shortest in the country. If the owner doesn’t pay within this time, you can generally move forward with the foreclosure process.

(speak with your attorney)

2. Connecticut

Image Credit: https://en.m.wikipedia.org/wiki/Flag_of_Connecticut#:~:text=The%20flag%20of%20the%20state,%2C%20Connecticut’s%20state%20motto.

Connecticut also has a 6-month property redemption period. The state also provides an 18% annual interest rate on tax liens, making it an attractive option for investors looking for fairly quick returns.

3. Massachusetts

Image Credit: https://en.m.wikipedia.org/wiki/Flag_of_Massachusetts

Massachusetts joins the list with a 6-month redemption period and a 16% annual interest rate. This combination of a short period and a high interest rate certainly makes it one of my favorites as a potential investor.

4. Rhode Island

Image Credit: https://en.m.wikipedia.org/wiki/Flag_of_Rhode_Island

Rhode Island has a 1-year redemption period with a 16% annual interest rate. While not as short as Maryland or Connecticut, it’s still relatively quick compared to other states.

5. Washington D.C.

Image Credit: https://en.m.wikipedia.org/wiki/Flag_of_Washington,_D.C.

Washington D.C. offers a 6-month redemption period with an 18% annual interest rate. This is another excellent option for investors who prefer shorter waits for returns on their capital.

Tips for Investing in Short Redemption Period States

1. Stay Informed

Always check the latest state regulations, as they can change. States might update their laws or interest rates, so stay informed to make the best decisions.

2. Act Quickly

With shorter redemption periods, it’s crucial to act quickly. Make sure you’re ready to start the foreclosure process as soon as the period ends if the owner hasn’t paid.

3. Diversify Your Portfolio

Don’t put all your eggs in one basket. While these states have short redemption periods, it’s smart to diversify your investments across different states and types of properties.

4. Understand the Risks

Short redemption periods can be attractive, but they can also come with higher risks. Make sure you understand the local market and the specific risks associated with each property.

Next Steps

1. Research Further: Use online tools and resources to get more details on each state’s tax lien process.
   
2. Join Investor Forums: Engage with other investors to share experiences and learn from their strategies.
   
3. Consult with Experts: If you’re new to this, consider consulting with a tax lien investment expert to guide you through your first few investments.
   

Final Thoughts

Investing in states with short redemption periods can offer quicker returns, but it’s important to stay informed and be prepared to act fast.

Use this guide as a starting point, and remember to keep learning and adapting your strategy.

In my opinion, the best way I’ve found to learn is by doing and “failing forward” as they say. I bought my 1st investment property in 2020 during the middle of (you know what..cough..cough), and I had no clue what I was doing despite spending months researching how to invest in real estate.

But guess what? I did it.

And learned a ton of valuable lessons along the way!

So,If you’re truly interested in tax lien investing, consider subscribing to my newsletter and following along my journey from landlord to “leinlord” as a new tax lien investor.

As Leinlord grows, my goal is to provide a “behind the scenes” inside look at the tax lien auctions I participate in and thoroughly profile any properties that I win.

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Additionally, if you’re interested in booking a consultation to talk tax lien strategy feel free to schedule a one on one here.

P.S. I am still fairly new to tax lien investing but willing to share what I’ve learned so far, so please keep that in mind before you book!

I’m not an expert… (yet)

Look forward to having you in the Leinlord community!

Sources:

Connecticut – https://www.oldsaybrookct.gov/sites/g/files/vyhlif10491/f/uploads/terms_and_conditions_for_12-6-16.pdf , https://ct-tax.org/collecting-in-ct/

Maryland – https://dat.maryland.gov/Pages/TaxSale-FAQs.aspx , https://www.baltimorecountymd.gov/departments/budfin/taxpayer-services/tax-sale/

Massachusetts – https://www.nolo.com/legal-encyclopedia/what-happens-if-i-dont-pay-property-taxes-massachusetts.html , https://www.mass.gov/info-details/tax-lien-foreclosure-informational-outline

Rhode Island – https://www.cumberlandri.org/DocumentCenter/View/436/Tax-Sale-PDF , https://www.nolo.com/legal-encyclopedia/what-happens-if-i-don-t-pay-property-taxes-in-rhode-island.html , https://www.providenceri.gov/collector/tax-sale-information/

Washington D.C. – https://www.nolo.com/legal-encyclopedia/what-happens-if-i-don-t-pay-property-taxes-in-the-district-of-columbia.html , https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/Real_Property_Owner%27s_Guide_to_the_Tax_Sale_Redemption_Process_V.09.2022.pdf , https://code.dccouncil.gov/us/dc/council/code/titles/47/chapters/13