Cook County's Annual Tax Sale and Scavenger Sale offer a distinct investor strategy: buying delinquent tax liens with the possibility of eventually taking title to the underlying property. This is patient-capital, long-game investing — different from traditional acquisition financing.
Annual Tax Sale mechanics
Cook County's Annual Tax Sale auctions liens on properties with delinquent first-year taxes. Bidders compete by bidding down the interest rate (starting at 18% and going lower). The winning bidder pays the back taxes and receives a tax certificate. Property owners then have 2.5 years to redeem.
Scavenger Sale mechanics
Scavenger Sale auctions liens on properties with multiple years of delinquent taxes. Bids start at the back-tax amount. Property owners have 6 months to redeem after Scavenger Sale.
Redemption rates and yields
Most tax liens are redeemed before deed petition — typical redemption rates run 90%+. For redeemed liens, you collect the back taxes plus interest (capped at 18% annual, often bid down to 0-9% in competitive Cook County auctions). For non-redeemed liens, you can petition for tax deed.
Financing tax deed properties
Once you take tax deed and clear title, the property becomes financeable like any other acquisition. Hard money and conventional financing are both available. The challenge: tax deed properties have often been vacant or distressed for years, requiring significant rehab.
Cook County Tax Sale Investor Financing FAQ
Register with the Cook County Treasurer's Office in advance. The Annual Tax Sale typically runs in late spring; Scavenger Sale every other year.
At Annual Tax Sale, bidders bid down from 18% interest rate. At Scavenger Sale, bids start at the back-tax amount.
2.5 years from Annual Tax Sale; 6 months from Scavenger Sale.
Tax deed extinguishes most prior liens including the original mortgage. Some federal liens (IRS, federal tax liens) and certain other claims may survive — work with a Chicago tax-deed attorney.
Generally no — it requires deep understanding of redemption mechanics, lien priorities, and the petition process. Plus long capital lockup. Better suited for patient, experienced operators.
Cook County auctions have become competitive enough that effective returns are often 4-9% on redeemed liens — comparable to bonds. The upside is on non-redeemed liens where you take property; that's where the asymmetric returns come from.