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Owner Occupied vs. Investment Property Financing for Your Business

August 21, 2023

Commercial real estate investing continues to thrive throughout the Southeast Texas Gulf Coast region, with property investors always searching for ideal sites for development. Finding the right location is key, but the most important part of securing commercial property is having reliable funding when you’re ready to purchase.

Whether you need an owner occupied loan for a new business location or an investment loan for rental properties you plan to lease out, Texas Gulf Bank has the financing solutions you need.

Discover the different options for owner occupied vs investment property loans, and why Texas Gulf Bank is the ideal lending partner for your commercial property management needs. 

What Are Owner Occupied Loans?

The right type of loan for your business needs will depend on what you plan to do with a commercial property. If you plan to purchase and occupy at least 51% of a commercial real estate property, then owner occupied loans would be the perfect lending solution.

This type of commercial property loan gives your company the opportunity to invest back into your business by making payments that build equity into your property, potentially raising your company’s value.

With funds from an owner occupied commercial real estate loan, your business has the ability to:

  • Relocate to a larger business location
  • Expand the current property
  • Buy a property for new business purposes

Owner occupied loans require businesses to occupy at least 51% of their space, meaning the remaining commercial real estate can be leased out to other businesses to create a secondary revenue stream in the form of rental income. The ideal borrowers for owner occupied loans include:

  • Big box retailers
  • Grocery stores
  • Fitness centers
  • Doctor or dental offices
  • Manufacturing facilities
  • Other industrial businesses

An owner occupied commercial real estate loan could give your business the financial resources needed to strengthen your company and grow your footprint.

What Are Non-Owner Occupied / Investment Loans?

Are you purchasing an investment property with the intent of fully leasing it out to other businesses? If so, you would likely benefit from a non-owner-occupied commercial real estate loan, also known as an investment loan.

With an investment loan, your business gains the ability to expand your investment portfolio by purchasing a commercial property primarily for leasing to third-party tenants. These loans do pose a slightly higher risk for lenders, so borrowers may need to meet higher down payment requirements than owner-occupied loans, but may still qualify for competitive interest rates and loan terms.

Investment loans are available for a wide range of uses, including:

  • Shopping malls
  • Strip centers
  • Industrial warehouses
  • Office parks
  • Medical complexes

Commercial real estate investors that want to expand their investments and grow their portfolio can pursue investment financing from Texas Gulf Bank to help accomplish their goals.

Lending Criteria for Owner Occupied vs Investment Property

Although owner occupied property loans and investment loans both provide funding for commercial real estate purchases, there are slight differences in loan qualifications and loan terms for each one.

At Texas Gulf Bank, our experienced business loan team helps explain each type of loan and identify the best loan solution for your specific needs. The application process begins with an initial assessment to determine your plans for a commercial property.

Our loan officers will want to review the following information to determine your loan qualification, including but not limited to:

  • Budget for lot purchase
  • Construction plans, including building elevations
  • Three most current filed years of business tax returns and financial statements
  • Year-to-date balance sheet and income statement
  • Three years of personal tax returns
  • Current personal financial statement
  • Land plat/survey

In addition, our loan team will review other key factors, such as your credit history, credit score, and Loan- to-Value Ratio (LVR) (aka Loan-To-Value/LTV ratio), to help determine the optimal financing solution for your commercial property purchase.

We understand the importance of prompt funding and meeting construction timelines, so we strive to provide an efficient and streamlined loan review process. As a local bank, we have an in-house loan review team in place, so we may be able to expedite loan reviews and funding for any approved loans.

We Have the Experience and Loan Solutions Your Business Needs 

At Texas Gulf Bank, we have over 110 years of experience serving businesses across the Southeast Texas Gulf Coast region. We believe in strengthening our community by offering reliable financing options and banking services that support business growth.

In addition, we also value the importance of building strong relationships with clients and always providing exceptional service. Partnering with our bank for owner occupied commercial property or investment loans means you can expect the following:

  • Professional services with personalized attention
  • Access to skilled loan officers with extensive loan experience
  • Strategic financing solutions
  • Prompt in-house loan reviews
  • Expedited funding for approved loan applications

We offer a wide range of effective lending solutions to businesses in need of funding for future endeavors, including owner occupied and non-owner occupied commercial real estate loans. With the right kind of financing available, your business can be better positioned to take advantage of key growth opportunities and achieve long-term success. 

Contact Texas Gulf Bank to Start the Application Process 

If you are ready to purchase a property for your new business location or a commercial investment property, Texas Gulf Bank is ready to help.

Contact Texas Gulf Bank today to speak with a loan officer about owner occupied vs investment property loans, or to begin the application process.

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consultation with one of our bankers?

All Loans Subject to Credit Approval