Mortgage & Commercial Lending News.

In a previous 2022 blog related to observable trends in commercial real estate, we mentioned that some real estate investors are seriously looking into transforming Class B and C malls from retail or commercial use into other industrial uses, for example, Data Centers. In this post, we expand on that topic by exploring in more detail what characteristics could make for a successful Data Center.

Here at AMI Lenders, where we specialize in private money loans to finance real estate, we are frequently asked by our clients: “Should I go through the expense of getting a home inspection even if the seller (or their realtor) assures me that the house is in good condition?” And the answer is: most definitely yes!

The Fix and Flip industry, which involves purchasing distressed properties, renovating them, and then selling them at a higher price, has experienced significant growth in recent years. However, the industry's current state can vary depending on the location and overall economic conditions.

At AMI Lenders, we are primarily interested in what is happening in Houston, TX, and its surroundings. However, that does not mean we ignore what happens elsewhere in the country. During the first days of March, we read an interesting text (“Remember the mall?”) in a newsletter^[1], which is mailed daily to one of us by the Los Angeles Times. In the said newsletter, author Ryan Fonseca talks about what is happening with malls in Southern California (and broadly elsewhere in the country). The article by Mr. Fonseca ties in nicely with what we posted in mid-2022 about trends in commercial real estate (link here) and, particularly, retrofitting Class B and C malls, even though some of the California cases discussed happen to be retrofitting of Class A malls. So, let’s delve further into the topic.

Private hard-money lenders have been a significant financing force behind the Fix-and-Flip (F&F) business model, which has risen to prominence among real-estate investors during the past 10 to 15 years. Yet, given the hefty increase in mortgage rates during 2022, and a somewhat cooling housing demand, real estate investors might be hesitant about starting an F&F process during 2023.

Many of our potential and current clients have asked us (far too many times to remember and count): “How can I save enough for a downpayment?” The first answer that always comes to mind is: “through savings discipline and financial planning.” As one of Houston’s premier private residential lenders, and native Houstonians, we know and have witnessed how hard it is to earn enough money to make a decent living in our city, let alone to save for a mortgage downpayment. Dedicating part of their earnings to the future and the unexpected is even more critical for most people. So, we thought that we could give some pointers as to how you could save enough for a downpayment.

AMI Lenders finances business purpose loans and consumer loans, both guaranteed by real estate. So, we consider it a good idea to summarize the differences and commonalities between these two types of loans for the benefit of our clients. 

The vast majority of Americans tend to consider banks to be the “go-to place” to obtain financing. If a businessman needs a multipurpose line of credit for their day-to-day operations, or a working capital loan, or a loan to acquire a specialized piece of equipment, or maybe a young entrepreneur is looking to start a new business, they will most likely talk to a bank about obtaining a business purpose loan. The same goes for a young adult or a head of household looking for an auto loan, or a loan for purchasing a new appliance to replace a broken one, or just looking for the benefit of having a credit card: they will usually talk to the bank in which they have their savings or checking account.

You will have noticed that when applying for a loan with almost any financial institution or hard money lender in the US you will be asked for the purpose of the loan. Some borrowers know why that’s important, but some others do not. Moreover, some of our loan applicants do not believe it is any of our business to know on what they will use the money! Because since all our loans are guaranteed by real estate, they think we are being too nosey.

You've likely noticed the flood of negative headlines about the real estate market. Higher mortgage lending rates, market volatility, and uncertainty are certainly having an effect. However, experienced private mortgage investors (not unlike many of AMI Lenders’ clients) know that real estate investment opportunities are still available.