Alabama vs Texas Tax Lien Investing (2026)
For a retail investor, Texas edges it overall (6.7/10 vs 5.6/10). The biggest single difference is penalty structure: Alabama scores 4, Texas scores 10. Neither is "best" for everyone — match the state to your goal below.
- System:
- lien
- Max rate:
- 12% bid-down
- Redemption:
- 3yr min 10yr
- System:
- redeemable deed
- Max rate:
- 25% flat premium yr-1 / 50% yr-2 (homestead-ag); 25% within 180d for other property
- Redemption:
- 180d/2yr
Head-to-head: 9 dimensions
12% ceiling bid down in 1% steps on GovEase; hot liens go to low single digits
25% flat within 180d non-homestead (~50%+ annualized); 50% yr2 homestead
Simple interest at bid rate only; no flat penalty on early redemption
25% premium due even on day-1 redemption (34.21); 50% in year 2
Owner may redeem anytime; foreclosure only after 3yrs, cert expires at 10yrs
180d for most property; 2yr only homestead/ag/minerals
Most counties auction liens online via GovEase; OTC pickup at county offices
First-Tuesday sheriff sales statewide; growing online county adoption
Online GovEase sales draw national bidders; metro liens bid near 0%
Metro auctions packed; bid-ups erode the deed discount
Liens sell at back taxes; many certificates a few hundred dollars
Full property price in certified funds at auction
Judicial foreclosure + quiet title; 2018-regime redemption litigation traps
Post-judgment deed with possession; quiet title often still needed
Lien-auction regime only since 2018 (40-10-180+), amended 2022; counties converting
Tax Code ch.34 stable for decades
Unsold liens sold over the counter at revenue commissioner offices (e.g. Mobile)
Struck-off resale lists from taxing units and their law firms
Choose Alabama if…
- you want stronger low capital entry — Liens sell at back taxes; many certificates a few hundred dollars
- you want stronger otc availability — Unsold liens sold over the counter at revenue commissioner offices (e.g. Mobile)
- you want stronger auction access — Most counties auction liens online via GovEase; OTC pickup at county offices
Choose Texas if…
- you want stronger penalty structure — 25% premium due even on day-1 redemption (34.21); 50% in year 2
- you want stronger redemption speed — 180d for most property; 2yr only homestead/ag/minerals
- you want stronger effective yield — 25% flat within 180d non-homestead (~50%+ annualized); 50% yr2 homestead