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Investing in Real Estate? Find a Construction Loan for Investment Property

January 30, 2023

Real estate continues to be one of the most popular choices for investors because of its stability and income potential over time.

Whether you are an individual borrower looking to invest in a second home as a rental property or a businessperson seeking financing for a commercial property, there are opportunities to tap into numerous investment opportunities along the Texas Gulf Coast.

However, real estate investors need strategic funding for the construction projects required to make their investment profitable. A construction loan for investment property is an ideal short-term option for real estate investors, including single-family homes, commercial lots, or major business parks.

Discover how effective lending solutions from Texas Gulf Bank can help fund the next phase of your investment property, whether for construction or renovation.

For Individuals: Residential Property Construction Loans 

If you plan to build a second home as a rental property with long-term income potential or want to renovate an older home to sell for a profit, you’ll need access to funding to pay for all aspects of home construction.

Texas Gulf Bank offers construction loans for residential property investors who need reliable financing solutions. We offer short-term loans that disburse funds to builders based on a construction draw schedule established before the project begins.

These loans are only available during the duration of the construction or renovation, so borrowers with construction loans will often convert them into permanent mortgages once construction is complete.

Investors with renovation loans may opt to pay off their loans once their renovated property is ready for rental or is sold for profit.

Residential construction and renovation loans may be used for projects such as:

  • Purchasing land
  • Constructing a house
  • Adding additional rooms or expansions
  • Building a garage
  • Interior and exterior renovations

Potential borrowers for residential construction loans should provide a clear rental plan (if applicable), have an established contractor and construction plan, and have access to the required down payment. 

We also ask that borrowers satisfy the criteria for short-term or long-term tenants. For example, are you looking to rent your second home for 12-18 months at a time to a long-term renter? Or are you planning to turn your investment property into a vacation rental home with weekend tenants? Providing us with that information will help us make a lending decision that fits your plans.

Interested in a complimentary
consultation with one of our bankers?

For Businesses: Commercial Construction Financing Options 

Commercial construction loans are an effective financing option for investors that plan to build commercial developments but need funding to cover all facets of construction.

Commercial construction funding allows your investment business to preserve working capital for daily expenses while also developing your investment property from an empty lot into a commercial space available for rent.

Construction loans may be used for commercial properties such as:

  • Mixed-use developments
  • Individual business properties
  • Strip malls
  • Retail shopping centers
  • Business parks
  • Major renovations for existing commercial properties

The ideal borrower for a commercial construction loan should be able to identify ideal commercial tenants, establish a detailed rental plan for all units available, and provide short-term and long-term rental income projections and occupancy rates. 

Apply for a Construction Loan for Investment Property

The process for applying for a residential or commercial construction loan with Texas Gulf Bank begins with an initial assessment to determine loan qualifications.

Our experienced loan officers will evaluate credit scores, debt-to-income ratio, available cash equity, and requested loan amounts for construction projects. For commercial property investments, we will also request market competition reports.

In addition, all applicants for constructions loans will need to present documentation including, but not limited to:

  • Completed loan application
  • Contractor/builder history
  • Three years of business tax returns and financial statements
  • Three years of guarantor tax returns and financial statements
  • Year-to-date balance sheets
  • Current cash flow and expenses
  • Debt schedule for existing loans
  • Tenant profile based on highest and best use of the property
  • Rental and occupancy projections
  • Exit strategies for residential or commercial property

Once all documentation is received, our in-house loan team will review your application and respond promptly. We will aim to support your timeline for getting started on the project.

Texas Gulf Bank Offers Lending Solutions for Investors 

With over 100 years of experience serving the Gulf Coast region, Texas Gulf Bank has an in-depth understanding of the lending needs of individual and business investors in the area. 

We proudly offer several types of lending options to our customers. And as a local bank, we have immediate access to decision-makers in order to get prompt approvals for closing and funding your loan.

Contact Texas Gulf Bank today to apply for a construction loan for investment property and learn how we can partner with you to support your project needs.

You can also stop by one of our local banking centers or complete our initial contact form to get in touch with a lender.

All Loans Subject to Credit Approval