Tax Lien
Lending
Texas tax lien loans are state-regulated and receive first-lien position above a mortgage when done correctly. With a proven network of broker-driven originations, we provide loan servicing, post-closing deal management, and efficient leverage to maximize investor returns.
The market for providing Texas tax lien transfers is limited and unique to Texas, creating strong barriers to entry.
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$529
Million*
28,269 loan outstanding end 2023 from 64 licensed lenders
$192
Million*
New Texas Tax Lien Transfers in 2023
$114
Million*
Residential New Texas Tax Lien Transfers, at average interest rate of 14.00%
$22.8
Million**
Historical yearly average of combined exclusive origination network in Texas Tax Lien Transfer Market
*Statistics sourced from the Office of Consumer Credit Commissioner – Property Tax Lending Consolidated Volume Report Calendar Year 2023
**Statistics from Historical Firm History
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LOW RISK
The Fund makes low risk property tax loans secured by the property (not the borrower’s personal income) and have a first lien position on the property.
HIGH CUSTOMER
RETENTION RATE
The current customer internal refinance rate is greater than 40% annually.
STRONG MARKET
OPPORTUNITY IN TEXAS
Based on data from the Office of Consumer Credit Commissioner, the amount of new loans in 2023 was $192MM making this a $200MM annual opportunity with more demand available to lenders due to the end of the Texas Homeowners Assistance Fund that financed approximately $325MM of property taxes the past three years.
The following indicators collectively suggest that economic conditions are aligning in a way that could drive growth in the Texas property tax lending market, as more property owners may need to resort to alternative financing solutions to manage their tax liabilities amidst broader economic challenges.
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RISING RECESSION
The likelihood of a U.S. recession has increased, with the current recession probability at 61.79%, significantly above the long-term average of 14.96% (NY Federal Reserve).
ECONOMIC
DECELERATION
The U.S. economy is expected to experience a slowdown, with real GDP growth projected to decelerate to a below-trend pace in 2024 (JP Morgan). This slowdown could increase the need for property tax lending as property owners look for ways to manage their cash flow amidst tightening economic conditions.
LEADING ECONOMIC INDICATORS
The Leading Economic Index (LEI) for the U.S. has shown a decline, indicating potential headwinds in economic growth going forward. Such economic indicators often precede increases in property tax delinquencies.
UNEMPLOYMENT
TRENDS
The Sahm Rule Recession Indicator, which tracks the unemployment rate, has shown increases in recent months, suggesting growing economic distress.
Texas property tax lending tends to perform well during economic downturns, contrary to many other types of investments, which might struggle.
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INCREASED DEMAND DURING ECONOMIC HARDSHIPS
When the economy is struggling, homeowners may face financial hardships that make it difficult for them to pay their property taxes.
STEADY REVENUE
STREAM
Unlike more speculative investments that can fluctuate wildly in value with economic cycles, the revenue stream from property tax loans is more stable and predictable.
REGULATORY ENVIRONMENT
Texas has specific regulations that govern property tax lending, providing a structured and stable environment for these investments.
REAL ESTATE AS COLLATERAL
Property tax loans are secured by a lien on real estate, which is a tangible asset.
LOW CORRELATION WITH OTHER ASSET CLASSES
The performance of property tax loans often has low correlation with the stock market or other financial markets, making it a good diversification tool.
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