How Will Changes in Real Estate Development Affect Commercial Real Estate Loans In Texas Post Hurricane Harvey?

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How Will Changes in Real Estate Development Affect Commercial Real Estate Loans In Texas Post Hurricane Harvey?

4page_img5-bigWhether it be commercial properties to house offices, retail space to support small businesses or multi-family homes to address growing population density, commercial real estate loans in Texas have long been a source of income and expansion for small business owners. However, with the recent devastation of Hurricane Harvey, regulations might be implemented that could affect this landscape.

Whenever the idea of regulation, especially when it comes to sources of economic development, comes up, there is always a debate. Individuals from all over the spectrum weigh in on the benefits or drawbacks of such changes and the impact that they would have on the market and economy as a whole. However, with the massive repercussion that Hurricane Harvey has had on properties in Texas, it seems as though regulation is a foregone conclusion. This will most certainly impact commercial real estate loans.

One way that regulations might change the real estate industry after Hurricane Harvey is in zoning laws, especially in Houston. Prior to the latest disaster, there had been little in the way of zoning restrictions. Real estate development was given a free hand and the population and local economy was greatly enhanced. However, this did lead to significant losses with the flooding and other destruction from the hurricane.

Because of the unique landscape of Houston and the surrounding area, there are many residents that have been clamoring for increased regulation in zoning. Houston has been extremely fast growing in the past few years and this had led to many commercial real estate loans being used for rapid expansion into the surrounding plains, which have ultimately proven to be unsafe and right in the flood plain. This did, however, provide for lots of very economical development.

However, there is still a good deal of opposition to potentially more regulations. Opponents of these measures claim that there is little evidence to prove that the development cycle is actually to blame for the flooding. One solution that has been put forward is for the city itself to provide a more comprehensive drainage plan.

In either case, the resulting changes in commercial real estate that are bound to come out of this most recent disaster will certainly have an effect on the loans needed to develop, or re-develop, Houston and the surrounding area.

How will the fight over regulation specifically affect commercial real estate loans in Texas?

While this largely remains to be unseen, there are some trends that could be affected. For one, the application, appraisal and title process all have the potential of taking more time the more restrictions are in place. With any sort of regulation, government agencies usually get involved in the process and that is sure to bog down a commercial real estate loan. It remains to be seen how it will affect interest rates or terms, but with more agencies in the mix, it is a solid prediction that fees for closing, at the very least, will increase. If zoning regulations do go into effect, the availability of such loans (and properties in general) might also decline.

Dennis-Dahlberg-Mortgage-Broker-1_th

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
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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.

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