Texas is a redeemable tax deed state. This means that, when a property is auctioned off for unpaid taxes, the winning bidder receives a tax deed for that property. This tax deed does not confer ownership of the property; rather, it entitles the winning bidder to receive payments from the previous owner.

The previous owner of a property has up to two years from the date of sale to "redeem" a tax deed. To redeem means to pay you, the tax deed owner, the full amount you paid for the property at auction; the deed recording fee; taxes, penalties, interests, and other associated costs (differ by county).

Finally, if the tax deed is redeemed within the first year from the date of sale, the previous owner must also pay you a premium equal to 25% of the total of all the other costs mentioned in this paragraph). 

If the tax deed is redeemed within the second year from the date of sale, the previous owner must pay you a premium of 50% of the total.

After two years, the tax deed is no longer redeemable, at which point you become the lawful owner of the property.

Tax sales present unique opportunities for real estate investors and others looking to diversify their portfolios and revenue streams.

Previous owners looking to reclaim their properties may pay more than 50% of all the money you spend purchasing the tax deed.

Even if the previous owners do not redeem the tax deeds and the property becomes yours, you likely purchased the property at a significant discount. Once the property becomes yours, you may want to renovate the property and sell it (often called "flipping").

If you don't want to invest in renovations, you may want to sell the property as-is or demolish any above-ground property and sell the land.