Building An Investment Property in Texas? Why You Need Bank Financing

November 14, 2025

For individual partners seeking to diversify their investment portfolios, the Southeast Texas Gulf Coast region offers attractive opportunities to develop new properties and potentially generate additional cash flow.

The prospect of building an investment property – whether it’s a portfolio of single-family homes, a retail center, or modern office buildings – can be a strategic move to generate passive income and build long-term wealth. However, turning this vision into a profitable reality requires significant capital.

Securing the right financing is one of the most critical steps in any property investment journey. While various funding options exist, partnering with a local, relationship-based bank offers distinct advantages that can set your project up for success.

Today, we will cover the business loans and financing options available for investors and explain why a bank like Texas Gulf Bank is an ideal partner for your next venture.

Funding Options For Your Commercial Real Estate Project

When you decide to build an investment property, the first major hurdle is financing. Real estate investors have several paths they can take to fund the construction of non-owner-occupied properties. Each option comes with its own set of requirements, benefits, and potential drawbacks depending on your financial situation and risk tolerance.

While options like private funding or using your own cash flow might seem appealing, they often lack the structure, support, and flexibility of traditional bank financing. Some common funding options include:

Commercial Real Estate Loans: At Texas Gulf Bank, we offer non-owner-occupied construction loans to support your construction and building plans.
Hard Money Loans: These types of short-term loans from private lenders are typically used for quick projects.
Private Funding: Capital is sourced from individual investors or groups who receive equity or a return on their investment in exchange for their financial commitment.
Real Estate Investment Trusts (REITs): While more of an investment vehicle, some REITs engage in property development financing.
Seller Financing: In these arrangements, the property seller finances the purchase for the buyer.
Using Your Own Cash On Hand: Self-funding a project provides complete control but carries significant financial risk.

For a long-term investment that requires stability and a reliable partner, a commercial construction loan from a bank is often the most prudent choice.

Why Choose a Bank When Building an Investment Property in Texas?

Partnering with a bank for your commercial real estate project offers a level of security and expertise that alternative funding sources often cannot match. An established bank provides structured lending solutions, regulatory oversight, and a commitment to your project’s success. Let’s look at the key benefits of financing your property investment through a bank.

1. A True Banking Relationship

Unlike transactional lenders, a relationship-based bank like Texas Gulf Bank focuses on building a lasting relationship with you. Our local lenders get to know you by name, dive into your business model, and understand your investment goals.

We don’t see you as just an account number; we see you as a partner. This relationship-based approach means we take the time to understand the nuances of each project – and how the project affects your overall investment portfolio.

Our experienced loan officers work with you to find a solution that aligns with your specific needs, rather than fitting you into a rigid, one-size-fits-all loan product. This personalized service can be invaluable when navigating the complexities of investment properties, knowing you have a trusted advisor by your side from start to finish.

2. Deep Local Market Knowledge

Real estate is inherently local. Utilizing a bank with deep roots in your community can be a powerful advantage. Texas Gulf Bank has served the region for over 110 years. Our longevity in the market gives us a comprehensive understanding of the local real estate market, from zoning regulations to economic trends and property values.

This local expertise enables us to offer insightful guidance, helping you avoid potential pitfalls and identify the best opportunities that fit your rental property goals. For example, we often conduct site visits to walk the property and discuss the details with you face-to-face.

We then leverage our knowledge of the area to help ensure your project is viable and positioned for success. For real estate investors, our local perspective is a significant asset that can impact everything from site selection to projecting rental income and managing vacancy rates.

3. Flexible and Structured Lending Solutions

Every property investment is unique. Developing single-family homes has different requirements than mixed-use commercial spaces or new office buildings. Banks can offer flexible lending solutions tailored to the specifics of your project.

At Texas Gulf Bank, we offer non-owner-occupied construction loans designed for developers and investors. These loans can finance the purchase of land, materials, and labor needed to complete construction.

The loan terms, which are typically 12-18 months, are structured to align with your construction timeline. For qualified borrowers, we can structure loan packages that may help you manage cash flow effectively until the property is ready for tenants and starts generating rental income.

4. A Partner Invested in Your Success

When you finance through a local bank, you gain a partner who is engaged in the successful completion of your project. We work closely with you and any third-party partner such as appraisers, surveyors, and site assessors to complete the project in a timely manner.

We review project budgets, plans, and the track record of individual partners who are investing in real estate to ensure every aspect of the project is sound. This due diligence protects both you and our bank, reducing the risk for all parties involved.

Our efforts may also increase the likelihood that your investment properties are completed on schedule and within budget. Then, you will be ready to attract tenants and advance to rent collection.

Getting Started with Your Commercial Real Estate Loan

Applying for a commercial real estate loan is a detailed process, but we offer a streamlined loan application process that may lead to a smooth experience for you and the other investment partners.

At Texas Gulf Bank, we typically require the following pieces of information to evaluate your application for a non-owner-occupied construction loan:

Detailed project budget and plans, including building elevations.
Company financial statements and tax returns for the three most recent years.
Personal financial statements and tax returns for the three most recent years from each individual partner.
A plat or survey of the property to be financed.

Our in-house loan review team will then review your completed application to make a lending decision. Having the required documentation readily available may lead to an expedited loan approval process.

If approved, our local lenders will structure the loan to meet your project needs, so that you are best positioned to achieve your goals as a real estate investor.

Recent Customer Success Story

Our lenders recently approved a $1.1M loan to help a client finance the construction of five single-family spec homes. Once built, the new structures will provide housing for a growing area of our community in the Southeast Texas Gulf Coast region.

We are confident that our non-owner-occupied lending solutions may help qualified borrowers with their next construction project.

Build Your Financial Future with a Trusted Partner

Building an investment property in Texas offers a path to potentially collecting rent and growing income. While many financing options are available, partnering with a trusted, local bank may provide the stability, flexibility, and expertise necessary for a successful long-term investment.

At Texas Gulf Bank, we are committed to helping individual partners enhance their portfolios. Our deep understanding of the local real estate market – combined with our relationship-based approach – could make us the ideal financial partner for your next project.

If you are considering financing options for the type of real estate investment you have your eyes on, let’s talk. Contact us to learn more about our commercial real estate loans. Discover the Texas Gulf Bank difference today.

All loans subject to credit approval