Tag Archives: texas commercial lending

Commercial Lending In Texas – Do I Need A Commercial Broker?

November 3, 2017Uncategorizedcommercial lending, commercial lending in texas, commercial lending texas, texas commercial lendingbigdaddydennis

You have decided that you want to take advantage of some of the unique potential of the commercial lending market in Texas, but you are unsure of how to proceed. Maybe you like to do things for yourself and make it a learning process, or maybe you simply don’t have the time to do it yourself. If so, then you need to decide if it is in your best interest to hire a commercial broker.

Deciding whether or not to utilize a mortgage broker is a big decision and one that is entirely up to you as an individual and as a business owner. It is quite possible that a broker could make your commercial lending experience very easy, but there is also a chance that using one could cost you a significant amount of money.

When deciding whether you need a commercial broker or not, there are several things to consider. First, is the amount of time that you are willing to spend hunting down your own lenders. If this is a project that you would like to devote many hours to, on the phone and in person, speaking with lenders and setting up appointments, then using a commercial broker will not save you time. Maybe you even like this part of the process and do not mind spending the time to do it. However, if you do not want to spend the time to shop around to different banks and lending sources to track down the perfect commercial lending program for your needs, then hiring a commercial broker might be an excellent investment for you because of the time that you are bound to save.

Another deciding in factor is whether or not you are familiar with the commercial loan process in general. If this is your first time, it might not be a bad idea to get a recommendation from a colleague or mentor and work with a commercial broker. They will know much more than you do at this point. However, if you are experienced in this, and have a good handle on the process, then perhaps you don’t need one. If you have done many investments, then you might even have some preferred lenders to cut through some of the leg work.

If you have a unique situation, whether it be for qualifying, for the terms of the loan, or for something else, it also might be in your best interest to work with a commercial broker. Lenders want to get as many qualified loans out as possible and might not take the time necessary to hear your specific situation, unless you have a professional to advocate for you. Whether you decide to use a commercial broker or not is a decision only you can make, but there are many benefits to securing commercial lending in this manner.

What if I tried commercial lending in the past, but was not happy with the outcome?

If that is the case, that it is probably very important that you work with a broker if you are looking for another commercial loan. They will be able to find lenders to compare for you and you will have more choices than you did before. If you didn’t have a good experience the first time and you would like to try again, having a commercial broker as your advocate could drastically change your experience in commercial lending.

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

Banks across the Nation and in Texas Commercial Lending Institutions are Tightening up Their Underwriting Standards

November 1, 2017Uncategorizedtexas commercial lendingbigdaddydennis

Banks across the nation and in Texas commercial lending institutions are tightening up their lending standards for commercial real estate loans. Developers, builders and investors are turning to private hard money lenders in order to secure the funding they seek in the time and amount that they require.

The Texas banking system has noted that they have some “balance sheet concerns.” This is due to lending concentrations in construction, commercial real estate, oil and gas, as well as agriculture. They are presently monitoring commercial real estate. Some banks are looking to expand their portfolio with good, strong borrowers while others have noted increasing risk-taking due to increased competition in the current low interest-rate environment leading to loose standards and less monitoring of properties and markets. In many instances, Texas commercial lending institutions with high commercial real estate loan ratios have begun tightening their underwriting standards.

According to the Federal Reserve Senior Loan Officer Opinion Survey, numerous banks have reported tightening standards for construction loans and for loans secured by multifamily units. Even investors in office, industrial and hospitality properties have seen increasing difficulty in obtaining funding from these traditional Texas commercial lending banks. This includes the tightening of the loan-to-value and debt-service coverage ratios. One of the main concerns is the number of commercial real estate loans that were funded in 2006 and that will now be looking for refinance options.

Part of this tightening also stems from global concerns as the recent name calling on the worldwide political stage has left uncertainty. These banks are then choosing to limit their commercial real estate portfolios to existing lenders, thereby decreasing their exposure to risks of the unknown. If you’re looking to obtain your first commercial or construction loan, developing a working relationship with one bank or lender can help you in times of increasing regulations or tightening Texas commercial lending structures.

Time to Funding and Amount of Capital

Increasing restrictions has led to a longer time to funding as well as a diminished amount of capital. In the current environment, matching the right project to the right lender ensures adequate funding in a timely manner. After all, a lender that understands the time constraints of construction or renovation also understands the need for capital when it is required which, in the long run, increases the ROI and provides for a stable base of operation.

As loan volumes and amounts decrease, contractors, developers and investors are turning to hard money lenders for their financial needs.

At Level 4 Funding, we work with hundreds of private hard money lenders, many of which prefer to invest in specific commercial real estate markets. This leads to a good working relationship with knowledgeable lenders and borrowers that work together for the common good. The truth is, it takes decades to build a rolodex such as ours and create the trust that leads to continued working relationships between lenders and borrowers. Many developers and contractors in commercial real estate return to us time and again for their loans because they know that we will do our best to connect them with the right lender that offers the best rate.

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

The 5 C’s Every Commercial Lender Looks At

October 11, 2017Uncategorizedcommercial lender, commercial lenders, texas commercial lendingbigdaddydennis

A commercial lender must decide which applications to approve and which to decline without personally getting to know the borrower. To make smart choices the lender will look at the 5 C’s to make their decision.

There are five basic lending criteria that every commercial lender will evaluate when reviewing a commercial loan application. Having a good understanding of the criteria and knowing how to best present your information can be a huge help in getting approved for a commercial loan. The first and maybe most critical is your capacity to repay the loan. The lender needs to be sure that you have a strong plan in place to repay the money you are borrowing. Your business plan is a good tool to demonstrate how you have that plan in place. In the end, if you can’t afford to repay the loan then even meeting all of the other requirements won’t get you a loan.

Capital is also important to your commercial lender. This is the value of the net worth of your company and also of you, the owner. In many cases the decision is based on the personal financial history of the owner as the business does not have enough credit history established. This leads to the third c, collateral. The commercial lender needs to know that you have the ability to guarantee repayment of the loan. The collateral might be the property that you are purchasing, the value of your inventory or of your equipment. But whatever you are offering as collateral, it needs to have a value in excess of the amount of the loan that you are requesting. This assures the lender that they can recover their investment even if you default on your loan.

Credit history is also an important factor. It gives the lender insight into how you have managed your finances and debt in the past. This document saves the lender the time of contacting all of the previous lenders that you have worked with or all of the vendors who have extended credit to your company. It is an efficient way for lenders to see your track record where finances are considered.

Character Always Matters

Character is a quality that is important for several reasons. First, it is an indication of how you will react in a difficult situation such as if you are having financial issues. A person of character will still find a way to pay their bills. It also speaks to the way that you do business and how successful you could be in the business world. A person with poor character will not last in the business world. Customers will not work with an unethical business.

Understand The Impact of the Five C’s

When you are preparing your loan application packet be sure to address all of the 5 C’s. This will provide the lender with all of the information that they need to know that you are a trustworthy person and that your business can afford the loan that you are requesting.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

What You Need to Know About Commercial Loans Texas

October 1, 2017Uncategorizedcommercial loans texas, texas commercial lender, texas commercial lending, texas commercial loans, texas commercial mortgage, texas commercial real estate loansbigdaddydennis

If you are not familiar with commercial loans Texas then you might believe that they are similar to any personal loan that you applied for. But the short answer is that they are not.

The first and largest difference between commercial loans Texas and a residential mortgage loan is that it is not backed by a guarantor such as Fannie Mae. This means that commercial loans Texas represent a much greater risk for the lender. For that reason, commercial lenders are much more selective about who they are willing to lend money to. Interest rates are higher and down payments are also much larger and that is just the beginning of the differences.

Balloon payments used to be common in residential mortgages but they are not any more. However, they are quite common in commercial loans Texas. So you will make payments that would pay off a loan in 30 years but the term of the loan will only be 3, 5 or 10 years. The result is a large balloon payment that is due at the end of the term. Most businesses are not in a position to pay the balloon payment and must refinance the final amount and keep paying on the property. Another option is to select a higher interest rate in return for a longer payment term.

Down payments are also quite different in the commercial property world. Unlike the 10% required to secure a home loan, commercial mortgages often require 25% or more down. A big reason for the larger down payment is the greater risk involved in a commercial property loan. Values on commercial property tend to fluctuate more frequently than residential values. For that reason the lender want to be certain that there is instant equity in the commercial property which is the collateral for the loan.

Understand the Cost of Borrowing

Commercial lenders are in business to make money and they do that in many creative ways. You know that you will be paying interest on the loan amount but that is not all you will be paying. Some lenders will charge points to cover their administrative costs while others will break the fees down and charge you per line item. Some fees can include an application, fee which is normally nonrefundable even if you are not approved for the loan, a loan processing fee, appraisal fees and survey fees.

There can also be Penalties

As a borrower, we are trained to think in terms of saving money. This means that paying off a loan early is always a good thing. It is a way to save on the interest or finance costs of a loan. But commercial lenders are counting on a specific amount of interest, or earnings, from your loan. And they are not willing to let you avoid any of those costs. Many lenders will include a prepayment penalty in the terms of your loan. This can mean that you will pay a flat fee for the right to pay off the loan early or it could be a percentage of the interest that you avoided paying. In some cases the savings on the interest is greater than the fees but in other cases the fees will cost you more than the continued interest. Be sure that you understand all of the terms of any loan before you sign or you will be forced to adhere to them.

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Tips to Getting Approved for Commercial Lending Texas

October 1, 2017Uncategorizedcommercial lenders, commercial lending, commercial lending in texas, commercial lending texas, texas commercial lendingbigdaddydennis

Commercial lending Texas is all based on a risk assessment. So investing some time to learn what your lender is looking for can provide a great return on your investment.

Knowing that commercial lending Texas is all about the risk that your company represents to a lender can make it easier to understand why the application process is so daunting. No one is going to walk into a lenders office and admit that they never pay their bills or that they are a poor business manager. So the lenders need to run businesses and their owners through a lengthy process to determine creditworthiness. But each lender might have different criteria and different motivation for making their decision. So taking the time to talk to each lender can afford you some very important information about the process and how you need to present yourself and your business during the application process.

Getting a copy of the application is a critical first step. This will tell you what information the lender wants. Read all of the questions and make a list of any issues or questions that you have about the application so that you can discuss them in person with a representative. Understand that some commercial lending Texas criteria will be fairly common but other criteria could be more obscure. All of the lenders will want to see financial reports, taxes and credit information. But some lenders might also be very interested in your industry, mentorships that you work with or other work experiences that you might have had. Providing that information can greatly improve your chances for approval.

Another key for some lenders is the length of time that you have been in business. If your company is new then providing a well-documented business plan can demonstrate your dedication to planning and growing your business. Other lenders might only be focusing on your Dunn & Bradstreet score. Know your number and understand that a score of 75 will almost certainly get you a loan.

Have Supporting Documents

Applying for commercial lending Texas is a long process and one that will require some effort and work on your part. Have documents to support the claims that you are making about your business. Show your long term profitability with several years of P & L sheets. Demonstrate your cash flow with years of monthly statements showing deposits. And have documents to show that you have gotten loans before and paid them off with no issues.

Tell Your Story

Some lenders are going to want to know more about you than just what the numbers can tell. If this is the case then be ready to tell the story of your business. Explain your motivation for starting the company and how you have grown it to the current point. Also give credit to all of the supporting members of your team. A well balanced management team will be less risky than a one man show. Take the time to get to know the lender and what they want to know to grant your request for a loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Texas Commercial Real Estate: Plans to update JC Penny’s Plano headquarters

October 1, 2017Uncategorizedtexas commercial lender, texas commercial lending, texas commercial real estate, texas commercial real estate loansbigdaddydennis

Texas commercial real-estate developer Sam Ware recently implemented plans to modernize a portion of JC Pennies Plano headquarters.

JC Penny recently decreased its foot print on its sprawling Plano, Texas headquarters. While the company will continue to remain on the site, it leased out part of the campus to developer Sam Ware. Ware is known for his value-added approach to commercial development. Ware will modernize his portion of the campus, naming the new development, “The Campus at Legacy West.”

Wares purchase was one of the largest commercial real estate transactions in North Texas in 2016. JC Penny made steps to downsize and after consulting with CBRE realtors and decided to lease out unused space on their campus. JC Penny will continue to occupy 1.1 million sq. ft. on the site, leasing the rest to Ware. Ware will make use of 600,000 sq. ft. of newly vacated office space as well as 300,000 sq. ft. of underused mezzanine space. The total sale price amounted to 353 million not including the improvements Ware intends to make. Ware intends to directly invest 60 million into new improvements on the site, with the help of a 377 million dollar mortgage from Beal Bank.

Job growth in the area made the site particularly attractive to Ware and other developers. The Plano area has boasted job growth of 3.8 percent year over year, 1 percent higher than the rest of the state. Office absorption has been positive in the area for 81 months. The site is already adjacent to the sprawling Legacy West Development, which already has offices for Toyota, Liberty Mutual and JP Morgan Chase. It is also nearby the sizable “Legacy West” urban village. Ware claimed “There is not another competing Class A corporate campus with this much contiguous space available in North Texas.” He sees a unique opportunity in the purchase “To buy this building today would run around $400 per square foot. If we had to create this building today, the land alone would cost $100 million and it would cost $800 million to build it,”he said.

“The Campus at Legacy West,” will stand out among Texas commercial real estate developments.

The site already boasts many amenities. The property is the only office building in the area with a Starbucks, a Subway and a pharmacy already on site. 50,000 square feet is already dedicated to amenities. Ware intends to expand on these amenities. He and his partners will spend 100 million dollars to add updated child care facilities, medical offices and expanded food service options. These updates will no doubt attract tenants to “The Campus at Legacy West.”

The area around the campus is one of the most desirable in Texas commercial real estate. Will Wares improvements to the site pay off?

A lot is at stake for Ware with such a huge investment. The site has many advantages already and clearly the immediate area is in high demand with a number of multi-billion dollar developments already established. Will Wares improvements to the site be enough to distinguish “The Campus at Legacy West” from adjacent office parks? Time will tell.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Texas commercial real estate: Parkland Memorial Hospital to see redevelopment

October 1, 2017Uncategorizedtexas commercial lender, texas commercial lending, texas commercial real estate, texas commercial real estate loansbigdaddydennis

Texas commercial real-estate developer Sam Ware has big plans to revitalize Dallas aging Parkland Hospital Campus

Ware recently completed a lease buy back arrangement for the 38 acre property with the Parkland Health and Hospital Systems Board of Supervisors. Ware is entitled to 500,000 sq. ft. of the site for the next three years. Ware intends to redevelop the location into an amenity rich, mixed use development known as “the District.” Ware has made it his business to add value to aging properties like Parkland Memorial Hospital. With so much new office space going up in the area, will the remodeled Hospital site be able to compete? Ware obviously thinks so.

Sam Ware is not unfamiliar with redevelopment projects. He has been redeveloping a range of sites since the 1980’s. His most recent acquisition, a portion of the JC Penny Headquarters, he intends to develop into, “The Campus, at Legacy West.” Ware has called the Parkland project “a once in a life time opportunity.” Claiming “you couldn’t get a similar deal in Dallas’ competitive market for under 500 million.” True to his form, Ware will focus on keeping costs low by redeveloping the existing buildings on the site. In his appeals to purchase the property from the Parkland Hospital Systems’ board of directors he claimed the form of the site is, “dysfunctional, but your bones are worth $200 million. Just let the architects figure it out.”

Ware will invest 250 million dollars in the project to redevelop it into a mixed use destination called “The District.” Current proposals to renovate and repurpose the existing buildings include, converting the emergency room tower into a hotel for visiting doctors and developing micro-apartments by combining old patient rooms. New amenities will be added to the site as well. Ideas include a valet service, a high end gym, restaurants and a grocery store. To plan the redevelopment, Ware intends to use the team that helped him implement his vision at the former JC Penny Headquarters

Wares redevelopment project has significant potential when compared to other Texas commercial real estate developments.

Prior to the sale CBRE described the Parkland Memorial Hospital campus as a “significant redevelopment opportunity in Dallas-Fort Worth,” an apt description. The site sits on 38 acres in the heart of Dallas’ medical district. The campus has about a dozen existing buildings, of varying sizes along with parking garages and open land. It is adjacent to Lovefield and Dallas’ uptown district. In addition the site boasts access to two nearby commuter rails. Redevelopment of the site is an undeniable opportunity. The immediate area has the highest density zoning in Dallas, outside of the cities central business district. High density zoning allows up to twenty stories to be added on to the sites existing buildings, giving the opportunity to expand the available square footage on the site to to 4.5 million.

It is uncertain whether “the District” will stand out among other Texas commercial real estate developments.

Ware intends to capitalize on the sites pre-existing advantages. The Parkland Campus is centrally located and indicated for high density development. Clearly it is cheaper to remodel the existing buildings on the site. Other developers may have simply started from scratch. Ware has succeeded with similar efforts in the past and the proposed amenities will no doubt add value to the location. Time will tell whether “the District” will be able to compete with new construction in the area.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Texas commercial real state: Will oil prices bring more uncertainty than Hurricane Harvey?

September 30, 2017Uncategorizedcommercial hard money lenders, texas commercial lending, texas commercial loans, texas commercial real estatebigdaddydennis

Texas commercial real estate and the Houston market in particular have suffered as a glut in production drags down oil prices.

Crude prices remain 15 percent lower than their 2014 peak. Prices continue to linger below their historic averages. The Houston office market has since seen negative office absorption rates since oil prices crashed in 2015. Low oil prices eat away at the profit margins of the areas energy firms. New employment by these firms remains tepid and the need for new offices has contracted considerably. Hurricane Harvey’s impact on Houston’s office market will have a short term effect. In the long run however, low oil prices will have a much larger impact on demand in the area for new offices.

Turbulent oil prices had taken a toll on Houston’s office market long before Hurricane Harvey arrived. Negative absorption rates in the market, left more office space empty than could be sold off. Twenty percent of the cities office space sits vacant according to Colliers, the highest rate in two decades. Uncertainty in the oil markets drove many companies to shrink their foot print in the region, or to consolidate their existing space. Tenants extracted lower rents from their landlords or demanded new renovations in return for holding onto their existing leases.

Office construction was booming prior to the oil slump. Energy companies experienced record profits, as a result of fracking and other new found efficiencies, which increased oil production. Prior to the slump in 2015, Moodys claimed the region would experience record job growth because of these new developments in the oil industry. Such forecasts fueled speculative office construction. 10 Empire State Buildings, or 26 million sq. ft. of new offices were constructed during the oil boom. But the advances led to a surplus in oil, which dragged down prices worldwide and demand for offices fell as oil prices declined. Energy companies decreased their near-term hiring, which lowered their need for new office space. This dynamic reveals why so much of Houston’s office-space now sits vacant. If oil prices continue to languish, these offices will likely remain vacant in spite of Houston’s relatively robust economy.

Economic diversity has helped sustain the Texas commercial real estate market in the midst of the oil slump. But if oil prices decline in the future, job growth and the demand for offices will decline as well.

Houston benefits from increased economic diversity, which helped offset the painful effects the decline in oil prices. Jobs in the area have increased by 15,200 since prices collapsed in 2015. Jobs may be growing steadily, but if oil prices remain at historic lows this growth could contract, putting the regions office market greater at risk. Houston remains heavily dependent on the energy sector. 10 of the cities top 20 employers are in the oil business. CBRE analysis indicates that lay-offs haven’t spread far beyond drilling and exploration at many of these companies. Even so, 80,000 jobs remain at risk if oil prices continue to languish according to Federal Reserve spokesman, Keith Phillips.

Oil prices continue to define Texas’ commercial real-estate market.

Oil prices will continue to define Houston’s office market. Until oil prices return to historic averages, employment is likely to remain below the expectations of many analysts, or could even shrink should prices fall any lower. Uncertainty in the oil markets is perhaps a greater threat than Hurricane Harvey to Houston commercial real estate market.

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Texas Commercial Lending: Report sheds light on how local banks may respond to Hurricane Harvey.

September 30, 2017Uncategorizedtexas commercial lending, texas commercial loans, texas commercial mortgage, texas commercial mortgage brokers, texas commercial real estatebigdaddydennis

How will Texas commercial lenders re-tool their lending efforts in the after math of Hurricane Harvey? A report by the Cleveland Federal Reserve may shed light.

The study demonstrates that the need for financing by disaster victims won’t be immediate. Lending activity subsides in the after math of major disasters. But within a six month period, as impacted economies recover, lending activity picks up considerably. The study indicates that small local banks increase lending by 25 percent in the year following a major disaster. How do these small banks manage to lend more money, when no doubt such disasters result in immediate loses?

The report outlines three specific strategies Texas commercial lenders may implement to raise capital and meet the increased demand for loans.

New loans will increase in areas of Texas directly impacted by Harvey and lending will decline in areas that saw little to no impact from the storm. The report claims banks shift their activity in order to meet the increased demand for new loans in impacted areas. This shift is demonstrated in Home Mortgage Disclosure Act (HDMA) data citied in the report. Every dollar lent in a disaster area is a 42-50 cent decrease in lending in areas that remain unaffected. While banks concentrate on impacted areas, capital becomes harder to access in other markets. This spreads the economic influence of major disasters throughout the economy.

New mortgages will be securitized and sold off at a higher rate. Selling new mortgages onto secondary markets helps local banks meet increased demand for loans in disaster areas. The new mortgages will be for smaller amounts, under the conforming loan limit in order to qualify for government backing. The government guarantee helps prop up lending activity in disaster areas. HDMA data in the report confirms this trend. Banks avoid the risk of doling out long term loans on the basis of short-term deposits. Local banks can therefore replenish capital each time they issue a new loan by securitizing and selling off new loans. Having this money on hand helps banks meet increased demand for loans in impacted areas. However the conforming loan limit may impact the size of mortgages issued by local banks in the long run. Local banks are therefore less likely to issue large mortgages in the immediate future.

Banks will increase interest rates on deposits in the short term, in order to attract additional capital. Local banks will compete with one another in order to secure new deposits and meet the demand for new loans. This competition requires banks to raise interest rates paid on savings accounts. Such competition is likely to occur in markets connected, but otherwise not impacted by Hurricane Harvey. Ratewatch data cited in the report finds local banks increase the interest paid on short term CD’s by 20 percent when compared to average rates.

Texas commercial lenders may or may not implement the strategies outlined above to meet the increased demand for loans.

The study indicates that lending will increase in areas that felt the brunt of Harvey’s impact, that new mortgages will be for smaller amounts and savings accounts will pay out higher interest rates. Whether this will hold true in the case of Hurricane Harvey remains to be seen.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Texas Commercial Lending: Could local banks benefit as a result of Hurricane Harvey?

September 30, 2017Uncategorizedtexas commercial lending, texas commercial loans, texas commercial mortgage brokers, texas commercial real estate, texas commercial real estate loansbigdaddydennis

Texas commercial lending will feel the impact of Hurricane Harvey. But commercial lenders in the Houston area expect certain sectors of the local economy to see an uptick. Could a short term boost in economic activity help the regions banks?

Houston based banks will see an increase in both lending and deposits, this could prove beneficial in spite of the short term losses incurred as a result of Hurricane Harvey. Recovery efforts after disasters can inject new life into the economies of impacted areas. During Hurricane Ike, Houston reported an increase in sales tax revenue. The case could be similar with Hurricane Harvey. A burst of economic activity in specific sectors could benefit the regions banks. In particular lending related to those areas of the economy that could benefit as a result of the storm.

Commercial lenders anticipate certain sectors of the region’s economy to experience an uptick in the wake of Hurricane Harvey. No doubt hotels will see a short-term spike in business and the multi-family market will experience increased demand as well. Commerce CEO, Ralph Babb Jr, noted in at a recent conference that “As a result of Hurricane Harvey, leasing activity has picked up substantially.” Displaced residents are looking for temporary housing, increasing the demand for apartments. Consumer loans, construction loans and auto loans will rise as well, as residents seek funding to replace damaged property. Short term increases in these areas of the local economy will help prop-up lending activity for local banks and this may even translate into a long term benefit.

Major disasters can be a net positive for local banks. Outreach efforts by local banks to disaster victims could strengthen customer relationships and help attract new business. Hovde Group analyst Joel Fenech cites Hurricane Katrina as an example of how disasters can benefit banks both in the short term and the long term, stating “the timing of Katrina, in my view, actually helped to shield the affected banks from the more devastating impacts of the Great Recession.” Fenech claims that banks that lent after Katrina emerged from the recession stronger and some even became acquirers of struggling banks.

Higher insurance prices will impact Texas commercial lending in the long run, but short term job growth for reconstruction may bolster construction loans.

The storm might deter new construction in Houston, but it could also prop up job growth in the short term. Major disasters increase risk for insurers, inflating the cost of policies. Higher insurance rates might deter new construction, unrelated to rebuilding efforts in the long term. The demand for new construction in Houston however has been tepid for some time. Efforts to rebuild could prop up jobs related to construction and bring about short-term employment opportunities in this struggling sector of the local economy.

Texas commercial lenders will benefit from Harvey in the short term, it is unclear whether this short term boost will translate into long term growth.

The hospitality industry will benefit and apartment sales will increase as a result of Hurricane Harvey. Consumer loans and loans related to reconstruction will also rise as residents seek to repair and replace damaged property. Reconstruction efforts could prop up employment in the short term. Whether these short term benefits due to the storm will translate into long term benefits for regions banks remains uncertain.

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Tag Archives: texas commercial lending

Commercial Lending In Texas – Do I Need A Commercial Broker?

What if I tried commercial lending in the past, but was not happy with the outcome?

Banks across the Nation and in Texas Commercial Lending Institutions are Tightening up Their Underwriting Standards

Time to Funding and Amount of Capital

As loan volumes and amounts decrease, contractors, developers and investors are turning to hard money lenders for their financial needs.

The 5 C’s Every Commercial Lender Looks At

A commercial lender must decide which applications to approve and which to decline without personally getting to know the borrower. To make smart choices the lender will look at the 5 C’s to make their decision.

Character Always Matters

Understand The Impact of the Five C’s

What You Need to Know About Commercial Loans Texas

If you are not familiar with commercial loans Texas then you might believe that they are similar to any personal loan that you applied for. But the short answer is that they are not.

Understand the Cost of Borrowing

There can also be Penalties

Tips to Getting Approved for Commercial Lending Texas

Commercial lending Texas is all based on a risk assessment. So investing some time to learn what your lender is looking for can provide a great return on your investment.

Have Supporting Documents

Tell Your Story

Texas Commercial Real Estate: Plans to update JC Penny’s Plano headquarters

Texas commercial real-estate developer Sam Ware recently implemented plans to modernize a portion of JC Pennies Plano headquarters.

“The Campus at Legacy West,” will stand out among Texas commercial real estate developments.

The area around the campus is one of the most desirable in Texas commercial real estate. Will Wares improvements to the site pay off?

Texas commercial real estate: Parkland Memorial Hospital to see redevelopment

Texas commercial real-estate developer Sam Ware has big plans to revitalize Dallas aging Parkland Hospital Campus

Wares redevelopment project has significant potential when compared to other Texas commercial real estate developments.

It is uncertain whether “the District” will stand out among other Texas commercial real estate developments.

Texas commercial real state: Will oil prices bring more uncertainty than Hurricane Harvey?

Texas commercial real estate and the Houston market in particular have suffered as a glut in production drags down oil prices.

Economic diversity has helped sustain the Texas commercial real estate market in the midst of the oil slump. But if oil prices decline in the future, job growth and the demand for offices will decline as well.

Oil prices continue to define Texas’ commercial real-estate market.

Texas Commercial Lending: Report sheds light on how local banks may respond to Hurricane Harvey.

How will Texas commercial lenders re-tool their lending efforts in the after math of Hurricane Harvey? A report by the Cleveland Federal Reserve may shed light.

The report outlines three specific strategies Texas commercial lenders may implement to raise capital and meet the increased demand for loans.

Texas commercial lenders may or may not implement the strategies outlined above to meet the increased demand for loans.

Texas Commercial Lending: Could local banks benefit as a result of Hurricane Harvey?

Texas commercial lending will feel the impact of Hurricane Harvey. But commercial lenders in the Houston area expect certain sectors of the local economy to see an uptick. Could a short term boost in economic activity help the regions banks?

Higher insurance prices will impact Texas commercial lending in the long run, but short term job growth for reconstruction may bolster construction loans.

Texas commercial lenders will benefit from Harvey in the short term, it is unclear whether this short term boost will translate into long term growth.