Hard Money / JV potential here in Houston?

Question

• Has anyone in the Houston market successfully secured hard money loans for commercial real estate investments? I'm particularly interested in hearing about your experiences with lenders, the flexibility of approval criteria, and the interest rates involved. Any recommendations for hard money lenders in Texas? 
• Has anyone in the Houston market successfully secured hard money loans for commercial real estate investments? I'm particularly interested in hearing about your experiences with lenders, the flexibility of approval criteria, and the interest rates involved. Any recommendations for hard money lenders in Texas? 
• Also, exploring the option of joint venture financing for a commercial project. Are there individuals or entities open to forming a joint venture? What types of projects have you found suitable for joint ventures, and how did you go about finding potential partners? Any advice on navigating joint venture agreements and selecting reliable partners?
• Also, exploring the option of joint venture financing for a commercial project. Are there individuals or entities open to forming a joint venture? What types of projects have you found suitable for joint ventures, and how did you go about finding potential partners? Any advice on navigating joint venture agreements and selecting reliable partners?

• Has anyone in the Houston market successfully secured hard money loans for commercial real estate investments? I'm particularly interested in hearing about your experiences with lenders, the flexibility of approval criteria, and the interest rates involved. Any recommendations for hard money lenders in Texas?

• Also, exploring the option of joint venture financing for a commercial project. Are there individuals or entities open to forming a joint venture? What types of projects have you found suitable for joint ventures, and how did you go about finding potential partners? Any advice on navigating joint venture agreements and selecting reliable partners?

Mike Klarman · Answer

I looked at this market and spoke to some GCs and some agents. It is competitive, most of the Texas major metro markets are. The houses are usually controlled by the wholesale outfits who have become very greedy and anything found on the MLS will not work numbers wise. You have unknowing, inexperienced investors over paying so the savvy investor can't compete. They will be outbid every time. The only way to make it a viable market is to break in at the wholesale market and develop your own direct from seller options that you can either wholesale or go forward with yourself.

Houston does have cheap lots to build on though, that opportunity is there if a viable GUC program can be found for a new investor (These are like blue unicorns - spoken about but not seen).

Dallas is worse than Houston. There's better markets with more accurately priced or even under priced inventory.

Houston does have cheap lots to build on though, that opportunity is there if a viable GUC program can be found for a new investor (These are like blue unicorns - spoken about but not seen).

Dallas is worse than Houston.  There's better markets with more accurately priced or even under priced inventory.

Cody L. · Answer

I do private loans on case by case.  Basically it has to be a deal that I'd be willing to buy myself at the amount of the loan.  If that's the case, I view the loan as having little to no risk.  Thus my rates can be low.And I seller fiance a lot of the properties I own as I can make more from a seller financed note than if I were to get that sales price in cash and put it in the bank.The 'catch' to properties I'd loan are the loan has to be at least $500k.  The buyer needs to have some skin in the game (unless the purchase price is WAY under market).  And it has to be centrally located (i.e., inside the 610 loop or not far outside.  Again, unless the deal is a slam dunk and large)

Brian Schroeder · Answer

Hi Mike

I am a licensed Realtor in Houston, TX; Washington, DC; and Maryland.

I have worked with King James lending in the past. Rates range anywhere from 11-13%, for a short-term loan. Obviously, these loans are best utilized for fix-and-flips or BRRR strategies.

Regarding your second question, Joint-venturing is a great option, depending on who your partner is, and the vision you both have for the project. I build new construction duplexes in Houston -- all of which are financed under a GP-LP structure. Typically I contribute around $35k towards soft costs (due diligence) and my LP investors (primarily high networth individuals) contribute the funds needed to build the project from an equity standpoint (approximately $150k because we utilize construction bridge financing).

I have found that on my 4-6 month construction deals, investors target around 22-30% ROI.

For longer term investments where you were to collect a management fee (i.e., rentals), you would likely benefit from raising the majority of the capital, and contributing very little so that your liquidity is not tied up into any one deal. All asset types are generally attractive for investors, I have numerous friends in the multifamily, RV parks, office, retail, and other investment spaces. The key from my perspective, is identifying an attractively priced deal, having the feasible and well-thought out strategy, incorporating talented and reliable trades, and presenting the information to investors through a comprehensive presentation.

You are already in the right place. Bigger pocket, Facebook, Twitter, Instagram. Social media is the mecha for reach; along with social media, industry events are another place I have found my partners in the past.

Reach out with any questions.

Erik Estrada · Answer

What kind of commercial real estate are you looking to purchase?

Wale Lawal · Answer

@Mike Hwang

The following general guidelines and things to think about will help you look into joint ventures and get hard money loans for investments in commercial real estate:Securing Hard Money Loans: Flexible Approval Criteria, Local Real Estate Forums, Real Estate Associations, Lender Relationships, Online Research, and Consultation with Experienced Real Estate Agents and BrokersInvestigating Joint Venture Financing: Make Connections and Develop Networks, Acquire knowledge, recognise complementary skills, determine project suitability, draft joint venture agreements, find dependable partners, seek professional advice, and make use of regional real estate groups and networks.Recall that thorough research is essential when evaluating joint venture partners as well as hard money lenders. Make sure you thoroughly investigate and screen possible lenders and partners to guarantee a fruitful and profitable working relationship.

Good luck!

Ryan Davies · Answer

Typically our lending partners programs are as follows:

• Rates: 10% to 14% (Most Deals are 12%)
• Terms: 1 Day - 24 Months (Most Deals are 6 months)
• Fees: 2-5 points(%) of loan amount paid at closing (Most Deals are 3 points(%))
• Minimum Loan Amount: $50,000 (For loans less than $200,000 we charge $2,500 minimum)
• Max Loan: 65% of After Repair Value(ARV)
• 100% Rehab Financing Available (Require 20% of purchase price down payment or cross-collateral)
• Closing Timeframe: 48 Hours - 3 Weeks (Most Deals are 10 business days)
• We have private lending partners throughout the entire United States that cover the following states: AL, AZ, AR, CA, CO, CT, DE, FL, GA, HI, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, OH, OK, OR, PA, RI, TN, TX, UT, VT, VA, WA, WV, WI, WY.
• NO PRIMARY RESIDENCES, NON-OWNER OCCUPIED ONLY, BUSINESS AND COMMERCIAL USE ONLY.

Chris Seveney · Answer

we have lent in these markets and know of many others who have. What typically is the showstopper for investors is thinking they can get 100% financing for acquisition and any work on the property - which essentially is an unsecured loan or a very large credit card.

Lenders in real estate lend because the money is backed by a real estate (secured).

Regarding joint ventures, my recommendation is always plan for the worst and what does that look like. What if someone dies, the project fails, someone wants to get bought out. Think of every worst case and talk about it now, as people are calm now and can agree. Trying to agree to these terms when they happen has emotions come into play and make it a lot more difficult to resolve

Hard Money / JV potential here in Houston?

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