One of the great things about tax lien investing is that there really are no holding costs to your investment until your ready to file and get the deed to the property. In fact, you are the one that gets to sit back and get paid for a change. The only additional funds you will need to put toward your tax certificate is to purchase additional subsequent liens that are only offered to you.  Moreover, those subsequent investments earn the full statutory rate - 18 to 24% in some states!

Your out-of-pocket costs do not start until you are at the end of the state redemption period and are ready to take the property.  In judicial foreclosure states, you will need to pay an attorney.  In states where you receive a deed automatically, you will need to pay an attorney for quiet title.  These attorneys (if they are familiar with tax liens) usually charge $2000 - 3000 per lien.  Luckily, in a lot of states, you will get this back if the certificate redeems before the title is cleared.  If not, and you have done your homework right, you will get the property at a great price!

Once you receive your clear title to the property, you may have additional expenses for an eviction or to clean up and repair the property for sale.  However, you'll be just about ready to sell it at that point and hopefully make it all back as profit at closing.

Investing in tax liens is a much better way to invest in real estate if you are concerned about unexpected costs.  In traditional real estate investing, you'll be responsible for all of the maintenance, broker fees, taxes, and other costs.  When you buy a tax certificate, you are the one being paid for those taxes. Furthermore, most liens redeem by the tax payer fairly quickly -- most of the time within the first year.  And, you can walk away happy with a great return and none of those traditional real estate investment headaches to worry about.
Just follow the most important rule of any investments - "Do your homework" --meaning do your due diligence on the property.  And, do not get suckered into paying for expensive training programs (boot camps) or over-paying your attorney because he is busy learning what a tax lien is and charging you for that.