Setabay Private Hard Money Lender: commercial loan texas

Showing posts with label commercial loan texas. Show all posts

Wednesday, September 20, 2017

Beware of These 4 Mistakes When Seeking Commercial Loans Texas

There is a lot of information that you need to gather before beginning to process commercial loans Texas. Knowing these common mistakes can help you avoid pitfalls and get your application approved quickly.

When you are ready to investigate purchasing commercial property it is important to gather as much information as you can about commercial loans Texas. All too often, buyers wait to begin researching commercial loans Texas until they have found a property that meets their needs. As a result, they are in a hurry to find a lender and do not complete their due diligence. It is critical that you review many lenders loan terms and qualifications prior to applying for a loan. In some cases you might not meet the stringent criteria of a commercial lender or you might not know that there are many upfront fees that you will need to pay even before you know that you have been approved. Failing to complete the research can result in wasting money on application fees, lost time resubmitting documentation and even the loss of the property that you hoped to purchase as another buyer who already has funding has purchased it.

Another common error is not hiring an attorney who specializes in commercial loans Texas. This is a big transaction and one that will be legally binding once you sign the contract. Knowing the terms and clauses that you are agreeing to is critical. The only way to be sure that the contract is fair to you is to hire an experienced professional to review the document for you and work on your behalf during the negotiation process.

Having a Plan Is Critical

If you have borrowed money in the past then you are certain to have created a business plan. But if you have never needed a plan and have been simply growing as you needed to increase your services, then it is time to create a full business plan. This is the document that sets your goals for the future and defines how you are going to reach those goals. It is an important document to guide the business and to show potential lenders and investors the path that you will maneuver to grow your business. Applying early is important, but you need to be able to show the lender your plans for the money you are requesting. You need to demonstrate that you have a purpose for the purchase, that you have a specific size and location in mind and that you have the means to repay the loan. You can begin the plan with an excerpt from your business plan and then go into more detail about the property that you are seeking and how it will help to grow your business.

Avoid the Common Issues

Purchasing commercial property is a big commitment and one that you should plan very carefully for. The size of the investment and the risk that it represents to your businesses financial security is rather large. So planning for the loan, carefully selecting the lender and having all of your financial and business documents in order will help to make the process less stressful, less time consuming and much more rapid.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Hard Money Commercial Loans Texas

If you have located the perfect commercial property for your business but have not researched commercial loans Texas yet, then you will need a fast alternative to get funding. A hard money loan could be just what you need until you can secure conventional funding.

A hard money loan is simply a loan that is short term and the lender is an individual or private investor instead of a bank or other main stream lender. The loan is secured with the property that you are buying so that the lender has a means of recovering their investment if you default on the payment. The term of the loan is normally twelve months but it can be as long as 2 to 5 years. The borrower makes monthly payments on the loan which are normally all interest or interest and only a small amount of principal. At the end of the loan term there is a balloon payment that the lender must pay.

There are many reasons that hard money commercial loans Texas are popular with borrowers. The first is the fact that the biggest qualification for the loan is the value of the property. The lender is not looking at the borrower’s credit history, the financial condition of the business or even the industry that the company is involved in. The main criteria for getting the loan is that the property being used as collateral is worth more than the amount of the loan. In addition, the lender is not going to deny a loan due to a recent bankruptcy or other financial issue.

Another advantage of a hard money loan is the time that it takes to process. In many cases standard commercial loans Texas can take 60 to 90 days to complete the application process. But you can make a request from a hard money lender and normally have an answer in a few hours or a few days. This fast turnaround time can be very helpful if you have found a great deal on a property and need to act fast to make the deal. You will then have a year or more to complete your research and prepare to begin the application process for commercial loans Texas.

What Hard Money Can Be Used For

In general, hard money loans are much more flexible than conventional loans. The only caveat is that the property have a value greater than the loan amount that you are asking for. The lender is making a better interest rate on the hard money loan but they do want to be sure that the collateral property will hold its value. In many cases, you will need to make a decent down payment to create instant equity. This assures the lender that the property will always be worth more than you owe and foreclosing would allow them to recover their investment.

What a Hard Money Loan Will Cost You

You are going to be paying a slightly higher interest rate and you will also be paying points. But the exact rates will be determined by the lenders. If you are in an area of the country which has a large number of investors offering hard money loans then the rates should be very competitive. But in areas with few investors the rates could be higher. As with any potential loan, you will want to ask for a full fee schedule and list of any other charges that you might need to pay before you sign the loan agreement.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Getting Approved for Commercial Loans Texas

Using commercial loans Texas is the most common means of purchasing a commercial property. But getting approved for the loan is not as simple as you might think.

When you are interested in buying a commercial property your first search on the internet should be commercial loans Texas. You will want to completely understand the requirements for getting approved as well as the amount of information that you will need to provide for the lender. Knowing this information can save you a lot of time and frustration as you enter into the world of commercial loans Texas.

One of the biggest factors in the amount of money you will be able to borrow is the actual value of the property that you want to purchase. An appraisal is needed to determine the value of the building and land that you will purchase. This is critical information for the lender as they need to be sure that the property value is greater than the amount of money that you are borrowing. And unlike a residential property, a commercial property value depends on the location, accessibility and size in addition to the condition of the property.

Another big factor in your approval for commercial loans Texas is your credit record. Due to the size of most commercial property loans, the financial requirements are more stringent than those for a residential loan. In addition to a strong payment history and good credit overall, lenders will want to see that you have a steady stream of revenue which will allow you to make the needed payments. Your profit and loss documents as well as your account receivable will be important to show that you can afford the loan that you are requesting.

Be Ready For a Big Down Payment

Along those same lines, you will need to be able to make a significant down payment on the property. There are a few reasons why a larger down payment is required. First, a commercial loan is much larger than a residential loan and that means it represents more risk to the lender. In addition, commercial property values tend to fluctuate more frequently than residential properties. The lender needs to be certain that the value of the property never drops below the remaining balance on your loan. Making a large down payment gives you instant equity in the property and provides the lender with added security as well.

Know Your Lenders Requirements

All of these factors are fairly common requirements across most commercial lenders. But you will want to speak to each potential lender to get a list of their criteria for granting a loan. In some cases your business might be too new or not have a substantial enough credit history to qualify for a loan. In that case, you will need to provide personal financial documentation and then a personal guarantee for the loan to be processed. Knowing what the lenders require will allow you to select the lenders who offer you the best potential outcome as well as the best terms to meet all of your financial needs.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Preparing for Commercial Loans Texas

Preparing to apply for commercial loans Texas can be a long process. But it is one that will provide a great return on your investment.

Applying for commercial loans Texas is more complicated than most business owners think it is. There are many qualifications that you will need to meet and many documents that you will need to provide to demonstrate your creditworthiness and professionalism to the lender. Investing some time to prepare your documentation and to understand the criteria for approval will save you time and money when you find the perfect property to purchase.

One document that your lender will scrutinize is your balance sheet. Not only do they want to know that you have a good credit history and that you have remained current on other loans but they will also want to see the money that you have coming in each month. Cash flow is what is going to give you the ability to repay your loan and the lender will want to see a consistent income over a long period of time to know that you are a good risk.

As you prepare to apply for commercial loans Texas you will also want to find an experienced legal professional to assist you. In most cases hiring an attorney who specializes in commercial loans Texas will ensure that you can negotiate the best terms and rates for your loan and also that the documents are completed correctly. The money that you spend on legal assistance will be only a small amount in comparison to the money that your attorney will save you on fees and interest during the life of the loan.

Find the Right Lender to Meet Your Needs

You might think that you only need to approach your current bank when you are seeking a commercial loan but the truth is that you need to broaden your search. In some cases, your familiar banker will be the best choice but you have no way of knowing that without speaking to several lenders. Borrowing from a lender who is the right size to best meet your needs can be critical to the long term success of the business relationship. A smaller lender is more likely to offer you a small loan and a larger lender is a better resource for a larger loan. It is simply a matter of finding a lender who specializes in what you are looking for. When you match their services to your loan then the processes will be simpler and smooth and your service will be of a much better quality. In addition, you are likely to get approval much more quickly when using a lender who is accustomed to processing many loans of the same approximate dollar amount.

Have Your Ducks in a Row

Knowing that you are entering into a long process, it is always wise to have your documents and information in good order. Submitting multiple packets can greatly slow down the approval process and can also cause your entire application to be rejected. Knowing some of the common pitfalls of the loan application process and avoiding them can make getting your loan must faster and easier.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tips You Should Know Before Appling for Commercial Loans Texas

Purchasing a commercial property can offer many benefits. But you need to fully understand the process before you apply for commercial loans Texas.

Most consumers know that a commercial property loan is a little bit different than a residential loan but they are not really sure how the two differ. When you research commercial loans Texas you will learn that commercial mortgages charge higher interest rates and often there are more restrictions written into the loan agreement than in the case of a residential mortgage. But borrowers who are savvy know that using a broker who specializes in commercial loans Texas can offer some great benefits. Brokers have access to second tier lenders who are willing to offer more competitive interest rates and lowers fees. These commercial loans Texas can be almost as cost effective as a residential mortgage loan.

Most first time commercial loan borrowers also don’t realize that they are going to need to make a more substantial down payment that they would on a residential property purchase. In some cases you might be required to pay 30% to 40% down. This is because the value of commercial properties can fluctuate much more and even more rapidly than residential properties. Lenders want to be sure that there is always equity in the property as that assures them of a means to recover their money if you default on the loan.

Another surprise for many new borrowers is the term of a commercial loan. A residential mortgage is commonly 30 years but a commercial mortgage can be as short as five years. The longest commercial mortgage loans are 20 years but most lenders will only extend the loan to 15 years. This means that you should also be expecting a higher monthly payment due to the shorter time frame of the loan.

What to Know If You Plan to Lease Space

If you are planning to lease part of the space in your new commercial property then you will also want to learn about the most common commercial lease terms. These terms can be very beneficial to you as you are depending on the lease money to help repay your commercial mortgage. Unlike the standard one year lease on a residential property, commercial buildings often require a longer commitment from the tenant. The most common terms are 3 years and 5 years. In addition it is very common to offer a 3 or 5 year option to allow the tenant to extend their lease after the initial term has expired.

Know What to Expect in Fees

Commercial loans require property appraisals and environmental tests to make sure that the property is not contaminated. These fees are passed on to the buyer and so are many of the administrative fees. You can expect to pay an application processing fee which is due prior to processing. This fee and the appraisal fee are normally nonrefundable. If you are approved then you will be asked to pay a processing fee, legal fees and points in addition to the interest on the loan. Knowing what to expect and how the process works can help to eliminate some of the stress that you will experience the first time that you are applying for a commercial property loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Lending Texas: How Harvey impacted Local Banks

Harvey's impact may result in immediate losses to Texas commercial lenders. Insurance payouts and construction loans could prove to be a long term benefit.

Banking activity in the Houston area accounts for 2 percent of banking activity nationwide. The storm may have inflicted up to 190 billion dollars in property damage. Not all banks are equally exposed to this damage, but the impact the storms impact will certainly be felt commercial banks in the region. In particular by those organizations with a majority of their accounts in the Houston area.

Banks that are concentrated in the Houston area face greater exposure to Harvey's aftermath. Allegiance Bankshares faces the greatest risk. Virtually all of its deposits and accounts originate from the Houston area. Other notable banks, Prosperity Bancshares and Zions Bancorp, also face significant risk. 30 percent of Prosperities accounts and 19 percent of Zions are concentrated in Houston.

During the storm the brunt of the impact on banking activity manifested in closures to local banks. Prosperity, for example was forced to close 60 locations during the storm, or 25 percent of its total branches. However the greatest concern for investors probably remains the potential damage to properties mortgaged by these local banks. This uncertainty drove down share prices down, not just for these organizations, but for exchange trade funds (ETFs) invested in these regional banks. For example, the 3.2 billion dollar KRE fund has 1.31 percent of its shares with Prosperity and 2.46 percent of its shares with Zions. The share price of KRE fund and of these banks themselves, dipped in the immediate aftermath of the storm. However the price of these shares seems to be recovering as investors grow more confident in the long term stability of these local commercial banks.

At this point it remains difficult to assess just what the long term impact of Harvey will be on commercial lending in the Houston area. One way to assess the impact of the storm is to examine the impact Hurricane Katrina had on local Banks in New Orleans. Analysts predict in the short-term, loan activity will drop off and losses will pick up as damaged properties are written off of balance sheets. However many see a bright future for Houston's’ regional banks. Local banks saw deposits grow by 20 percent in the wake of Katrina. This may be the case in Houston as insurance companies issue pay-outs and federal aid comes into the area. Lending activity may also increase as those impacted by the storm seek financing to rebuild and repair damage. Prosperity CEO David Zalman claims “We’re used to this, in the long run, this will create a robust economy for the state. You will see deposits increase in Texas banks because of the insurance money.”

In the short-term Texas commercial lenders and regional banks will suffer as damage is assessed.

The scope of physical damage to bank facilities is still being assessed, as well as the damage to properties financed by these local banks. In the short term this uncertainty may spook some investors. This was evident in the immediate impact on share prices for the Houston based commercial banks mentioned before. Investors seem to have long term confidence however, as the share prices of these banks has since recovered.

Texas commercial lenders and regional commercial banks may see a long term benefit from Harvey.

No doubt as federal aid and insurance pay outs are distributed, locals will increase their deposits in these banks. Lending activity is also likely to rise in the long run as those impacted by the storm seek financing to reconstruct their damaged properties. However investors long term confidence in the regions banks may not recover, if another disaster of similar scale to Harvey, strikes Houston area in the near future.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Texas Commercial Mortgages: Billions at stake due to Hurricane Harvey

Hurricane Harvey puts many securitized commercial mortgages in Texas at risk.

Moody’s claims some 1,500 properties may have been impacted by Hurricane Harvey amounting to 19.4 billion in outstanding CMBS loans. The number of CMBS financed properties at risk varies with each analysis. Competing methods of analyzing the storms damage to investors’ portfolios have emerged. One method is to consider the wider area impacted by the storm, the other is to consider the areas that were more acutely impacted.

One method of analyzing the damage is to consider properties in the disaster area declared by Governor Gregg Abbott. The area includes 54 counties and reaches as far as San Antonio. An opposing approach is to consider the disaster area declared by FEMA, an area encompassing some 33 counties. The first approach gives a broader sense of the storms potential impact on CMBS properties, while the second offers a more clinical assessment.

In the state declared disaster area there are about 1,200 CMBS loans amounting to 15.1 billion dollars that could be impacted by the storm. These loans are not government sponsored, and therefore, pose a higher credit risk to investors. Retail properties have the highest exposure among these loans. Making up 32.9 percent of the total, or 5 billion dollars, of the outstanding CMBS loans.

Considering the areas impacted according to FEMA the number of CMBS loans at risk is smaller, but the overall impact remains the same. In the 33 counties declared “disaster-areas” by the agency there are 900 non-government sponsored CMBS loans, amounting to a balance of 12.2 billion dollars... Retail properties again face the greatest exposure, making up about 30.1 percent of the total.

It will be difficult to directly quantify the impact of Hurricane Harvey on the CMBS market and Texas commercial mortgages in the short term.

Whether analysts consider the broader area impacted by Hurricane Harvey or the areas more acutely impacted the extent of the damage to the CMBS market will be difficult to estimate in the short term. The damage to each individual property will have to be assessed.

What is clear from both overviews is that retail makes up the largest share of CMBS loans potentially impacted by the storm. The performance of these loans in the future will largely depend on how the local economy recovers and whether these retailers will be able to retain their customers.

In the long term securitized commercial mortgages in Texas will continue to face risk from natural disasters.

Simply put CMBS lenders don't underwrite the potential cost of natural disasters. Therefore the market will always face exposure when disasters like Hurricane Harvey take place. Flood insurance, FEMA assistance and the willingness of private insurers to underwrite risk encourages development in disaster prone areas, in Texas and throughout the nation. Insurance may repair the damage caused by these disasters on the surface, putting some investors at ease. But the damage Hurricane Harvey inflicted on the local economy remains unclear. With retail properties facing the greatest exposure, the greatest risk to CMBS loans is not superficial damage that can be repaired, but Harvey's long term damage to the local economy and whether retailers can secure customers in areas where the population is displaced.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Real Estate Texas: What Tenants need to know

If you lease commercial real-estate in Texas, your land lord is obligated to protect your health and safety. However if a land lord refuses to make reasonable repairs it is vital that you don't take preemptive steps.

There are two types of conventional commercial leases in Texas, the periodic lease and the term lease. The periodic lease gives the tenant having the option of terminating the lease at the end of each month. Under a periodic lease tenants are obligated to pay rent for a full month plus one day, before vacating the property. Term leases last for a period agreed upon between the land lord and the tenant. Under this type of lease generally no changes can be made until the lease is up for renewal. Under a term lease tenants may have to pay the cost of maintaining the property.

No matter what type of lease your business has the land lord is obligated to ensure your basic health and safety. The land lord must ensure basic fire protection and ensure that devices like smoke detectors are well maintained. The land lord must maintain basic security and keep locks and alarms are in working order. Apart from these basic conditions, the land lord’s responsibilities will largely be defined by the terms of your lease. If you believe poor conditions have a material impact on your health and safety, the land lord is obligated to make repairs. If your lord refuses to make repairs, it is vital that you avoid withholding rent or taking preemptive action.

If you lease commercial real-estate in Texas, take specific steps before taking any action against your land lord.

The Texas Attorney Generals website advises you to make any complaint directly to your land lord via a certified letter. Clearly outline the repairs needed to the property. Prior to taking this step, be sure your rent is current. Upon sending the letter, request documentation proving your land lord received it. The land lord must make repairs within a reasonable time frame. This is generally within seven days of receiving the letter. If the land lord doesn't take reasonable steps to make the repairs outlined in the letter, send the letter again and wait another seven days. If the land lord doesn't respond, you may be able to terminate the lease. You may also be able to make any necessary repairs yourself and deduct the cost from your rent. You may also sue your land lord in order to compel them to finance the repairs you believe are necessary.

With Texas commercial real-estate the land lord’s responsibilities are largely defined on a case by case basis

Generally the terms of your lease will outline the land lord’s responsibilities for maintaining the property. Although land lords are obligated to protect your health and safety, you may have to prove in court how conditions on the property negatively impact you and explain why you believe your land lord is responsible. Therefore don't violate the terms of your lease prior to sending a certified letter, to demonstrate that the land lord is aware of your complaint. Consult with legal experts if necessary.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Real Estate Texas: 2017 Trends for the Dallas Office Market

The job market in the Dallas area remains robust. The demand for office properties will increase as business continues to expand. This is pushing prices higher in the short term. A common trend throughout the commercial real-estate market in Texas.

In 2016 Dallas area was the nation’s fastest growing metro. The employment base in Dallas expanded by the 3.5 percent in 2016. This growth in employment was the largest in the nation. Robust economic growth in the Dallas area will ensure a steady demand for office properties over the next few years. This increased demand is pushing prices higher. Although new construction is pushing up the price of office space in the short term, in the long term the Dallas area will likely remain affordable.

Prices for commercial office space are reaching record highs, with some competitive areas reporting prices as high as 50 dollars per square foot. These record high rents reflect the economic growth in the area. New companies are establishing themselves in Dallas and they are willing to pay the increased price for office space. Improved absorption rates in the area demonstrate this fact. Office space is being leased and sold off twice as fast in comparison to the same time last year. Not only are established companies looking for new locations, but new companies are moving into the area as well.

This year 2.5 million square feet of office space was sold or leased. 1.4 Million sq. ft. of which was new construction finished in either 2016 or 2017. The availability of new office space in the area is forcing some land lords to make drastic renovations to their properties to retain existing tenants. Although rental prices this year reached a record high of 25 dollars per square foot, the availability of new construction will make the market more competitive, pushing prices down in the long run.

Speculative construction remains high and this is pushing prices higher. Similar to much of the Texas commercial real-estate market.

New premium office space is selling off quickly in the Dallas area, fueling speculative construction. The total amount of office space under construction is down slightly from last year to roughly 8 million sq. ft. However rental rates are up, with an increase of 5.4 percent year to date. Half of the new premium construction is already leased. Clearly speculative construction is paying off for developers and tenants are willing to pay higher prices. But with construction and demand remaining steady in the area the price of office space is likely to stabilize.

As with much of Texas commercial real-estate, increased supply and steady demand may cause prices to stabilize.

Dallas’ robust economy ensures the demand for new offices will remain steady, fueling further construction. As the supply of office space increases, prices are likely to stabilize from their current highs. The construction of new office space is pushing up average rental prices in the Dallas area this year. However compared to other metropolitan areas, the Dallas area remains relatively affordable. This affordability will make the area attractive to employers for years to come.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Enter a post titleCommercial Real Estate Texas: 2017 Trends for Office Real-estate in San-Antonio

The commercial real-estate market in San Antonio remains resilient, particularly when it comes to office space.

Nation-wide the market for offices seems to be declining or stagnating. The San Antonio market is a unique exception. The market for new offices is rapidly expanding. New jobs are pushing up demand for offices in the area and new construction is filling up fast. Even with record breaking construction, the market may not be keeping pace with demand, pushing the price of office space in the area even higher.

The San Antonio area, like much of Texas, is seeing increased job growth. According to a CRBE analysis 24,900 total jobs were created in the region as of May of 2017. Office-related jobs have expanded by 2 percent this year. This job growth is accelerating the demand for new offices, making the San Antonio market a unique exception when compared to the rest of the nation, where demand appears to be leveling off or declining.

The price of office space in the area is at a record high, with an average price per sq ft at 22.54. This price is 2.7 percent higher than it was when compared to the same time last year. The rental price for Class A properties, with triple net leases, went up an astonishing 10.9 percent just since the last quarter. New properties are charging record these record high rental rates. The average price for office space is likely to increase, as new construction in the area escalates. 1.2 million sq. ft. of office space broke ground this year. Low vacancy rates in the area indicate that many tenants are willing to pay the increased prices.

Low vacancy rates, particularly in the case of new offices, indicates rising demand in the area. 40 percent of the 390,000 sq. ft. delivered so far this year is already leased out. The CBRE analysis quantifies 1.2 million sq. ft. of additional office space will be needed to keep up with future demand. Even with all the recent construction in the area, vacancy rates are lower this year.

As is the case with much of Texas commercial real-estate, the market for offices in San-Antonio is expanding.

Even with record breaking levels of office construction, new offices are filling up fast. As jobs move into the area, the demand for office space will only increase. The speed with which new construction is being sold off could indicate that construction is not keeping pace with current demand.

Increased demand will push rents higher in the area. A common trend with Texas Commercial Real-estate

San Antonio will remain an attractive place to do business for many years to come. The low vacancy rate, even in the face of record prices indicates that tenants in the area are willing to pay a premium for office space. With the vacancy rate tightening and the supply of new offices seemingly insufficient to meet current demand, land lords will continue to have greater leverage to charge even higher rents.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Real Estate Texas: How will Harvey impact the multi-family real-estate market?

Harvey's impact on Texas commercial real estate will be felt for many years to come. But the multi-family housing market in particular stands to see the greatest impact.

Co-star estimates that some 72,000 apartments were immediately damaged by Hurricane Harvey. The group’s updated analysis puts 75.1 billion dollars of property at risk, with multi-family apartments representing 18.5 billion of that total. With so many residents displaced in the wake of the disaster, the dynamics of Houston's multi-family housing market will change dramatically.

Prior to the storm the Houston multi-family real-estate market was considered oversupplied and by some accounts up to 62,000 units of excess housing existed in the area. 89 percent of multi-family properties were occupied before Harvey's arrival and the market had seen its first up-tick in 5 years. A combination of oversupply and consistent demand gave renters greater leverage prior to the storm. The competitive market forced land lords to offer lower rents in order to lease out excess housing. The amount of available apartment space will no doubt shrink in Harvey's aftermath.

The market will be changed by a shrinking supply of multi-family housing. More and more locations are likely to be condemned due to storm damage. Demand will increase as residents and aid workers seek undamaged places to stay. It is estimated that 200,000 homeowners are currently seeking temporary housing. Ed Wolff, President of Beth-Wolff Realtors, claims occupancy rates for multi-family housing have risen to 97 percent as a result of Hurricane Harvey. Teresa Guidotti Lowery of Colliers International estimates the inventory of multi-family housing has shrunk to some 51,000 units with 30,000 residents already displaced. The available units will obviously fill up in record time. Lowery estimates the outlying suburbs of Houston might not recover for two years, increasing the demand for apartments in the area.

The dynamics of the multi-family market in the Houston area and Texas commercial real-estate will change as a result of Harvey.

The market has clearly shifted in favor of land lords. Apartment space will likely remain at a premium in the Houston area for several years. The obvious flood risk may reduce new apartment construction in the future as insurers charge builders higher premiums. Lowery estimates a sustained increase in rental prices of 4.5 percent. This uptick is not only due to the increased demand from residents seeking temporary housing, but due to insurance pay-outs to landlords. As landlords rebuild and remodel they can charge even higher rental prices. Wolff claims that rebuilt properties can appreciate in value by as much as 10 percent.

Harvey may have changed the landscape of Houston and Texas commercial real-estate forever.

In the short term the supply of apartments will dwindle as storm damaged is assessed and more properties are condemned. The demand for temporary housing on the part of displaced residents should cause a steep rise in rental prices. The obvious flood-risk of the area will decrease new apartment construction in the long term. The greater question is how fast can outlying suburbs be repaired? If repairs are delayed long-enough, displaced residents may choose to remain in temporary apartments, permanently. If that is the case the landscape of Houston may be permanently changed.

Technorati Tags: commercial loans,commercial lending,commercial mortgage