Tactics and Case Studies for Texas Commercial Investment Properties

 

Texas real estate investors certainly do have opportunities to succeed with commercial and multifamily properties.  At the same time, these investors face unique challenges that can make it difficult for them to secure the loan necessary to execute their short or long-term strategies.

By understanding both the opportunities and risks inherent in these types of real estate investments, those looking to either purchase or refinance a commercial property in Texas can feel more confident about the loan process and better prepared to take action in the Lone Star State.

Commercial Investment Challenges in Texas

The challenges investors face when attempting to purchase or refinance a property in Texas are in many ways indicative of those faced by investors in any market in the U.S. today.

One of the primary concerns has to do with property size.  Banks and other traditional lenders often list property size restrictions in their loan guidelines – for larger institutions, a small loan for a small property may simply not be worth the effort.

Investors may also deal with challenges related to the location of their property.  Many lenders in today’s market only do business in urban and suburban markets.  Those who wish to purchase an apartment building out in a rural locale, for example, may be unable to work with most lenders.  This can be an especially pertinent issue in a sprawling state like Texas.

The good news is that investors are able to overcome many of the difficulties that they face -- and here’s the proof.

 

 Success Story in Sinton, Texas

  Property Type:  Multifamily   Purpose:  Purchase   Loan Amount:  $1,810,000   Location:  Sinton, Texas

Property Type: Multifamily

Purpose: Purchase

Loan Amount: $1,810,000

Location: Sinton, Texas

 

First-time investors may be tempted to attribute their lending challenges to their inexperience in the commercial mortgage arena.  But the truth is that even experienced investors must dodge pitfalls from time to time.

Take this case study from Sinton, Texas.  A seasoned investor wanted to purchase a multifamily property and was looking for a loan of nearly $2 million. 

The investor took the financing request to their bank since they had a pre-existing relationship.  But the property failed to meet the bank’s size requirement and the investor was turned away.

Thankfully, the investor did not give up.  Instead, they took their request to our team of commercial lending experts.  Commercial Direct’s team was willing to overlook the property size issue and even made it possible for the investor to get qualified without having to provide tax returns.

 

Success Story in Brookshire, Texas

  Property Type:  Multifamily   Purpose:  Purchase   Loan Amount:  $371,000   Location:  Brookshire, Texas

Property Type: Multifamily

Purpose: Purchase

Loan Amount: $371,000

Location: Brookshire, Texas

 

Property size is just one issue that can derail a commercial finance request.  This next investor came across 2 additional challenges when they attempted to purchase a multifamily property in Brookshire.

The first problem was borrower-related.  In this case, the investor was unable to provide the amount of documentation traditional lenders required.  This is an issue that affects many real estate investors – due to the nature of their business, documentation like tax returns often fails to accurately reveal their income.

This investor’s other issue had to do with the property’s occupancy.  Traditional lenders like banks have strict requirements when it comes to occupancy – apartment buildings and offices with vacancies or month-to-month leases are seen as riskier investments.  The number of vacancies in this investor’s multifamily property evidently made bank financing impossible.

However, alternative options do exist in today’s market.The investor took their request to the team at Commercial Direct and was able to lock in a reduced documentation solution, meaning they never had to provide tax returns during the transaction process.Since our team was comfortable with the occupancy level of the property, the investor was able to get the solution they needed.

Success Story in Pleasanton, Texas

 
  Property Type:  Multifamily   Purpose:  Cash-Out Refinance   Loan Amount:  $350,000   Location:  Pleasanton, Texas

Property Type: Multifamily

Purpose: Cash-Out Refinance

Loan Amount: $350,000

Location: Pleasanton, Texas

 

The borrower in our final case study had recently stabilized their multifamily investment property and was looking for a cash-out refinance solution.  Unfortunately, stabilization is another factor that can make life difficult for prospective borrowers.

Banks typically want to see that a commercial property has been stabilized for 2 years before they feel comfortable lending on it.  This can make it difficult for investors who successfully improve a property’s occupancy and cash-flow to qualify for a loan.

Fortunately, our team was comfortable with the property’s stabilization and the cash-out amount the investor requested.  As a bonus, the borrower was able to get the solution they needed without having to provide tax returns.

 

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