In October 2025, this month, my client closed the purchase of a commercial property worth approximately $1,650,000 in southwest Houston.  Negotiations took approximately 3 weeks, because buyer and seller were sometimes traveling.  Neither buyer nor seller appeared motivated, but they were.  The broker representing the seller was professional and helpful.

There had been other purchase offers from other prospective buyers.

My client made a cash offer which therefore was not contingent upon getting a loan with a reasonable amounts of earnest money and the option fee to buy the right to terminate during feasibility and inspections.

My client buyer immediately had a tenant for the property at a fair lease rate for 5 years.

The lease contract is promulgated and approved by the Texas Real Estate Commission and Association of Realtors. It provides that the tenant pay a monthly base rate plus a rate for property ad valorem taxes and hazard insurance and common area maintenance, referred to a CAM.

CAM, common area maintenance are paid by tenant each month plus the base rent amount. This monthly CAM payment is to pay for the  normal operating expenses paid by the owner.

The problem is that rent payments do not pay for Major Future capital expenditures such as Roof replacement Nor building foundation repairs.  Both may seldom happen but they are expensive large amount of money. A roof may cost $4 per square foot, thus can be between $20,000 to $100,000 depending on the size of the building.  Foundation repairs can cost $250 a foot to dig under a foundation. It may cost $400 per pier footing placed each 4 feet under the concrete slab.  A foundation repair on a small building might cost $10,000 to $20,000 or more.

Houston was built on mud. Thick dark grey gumbo soil. Every building will eventually need foundation work.  The gumbo clay soil imbibes water then dries, thus the foundation moves each dry or wet season.

I devised a method for the tenant to pay for Future Major Capital Expenditures.

The lease requires that the tenant to pay 5 cents per square foot of building each month, into a Sinking Fund (no pun intended).  Thus a 15,600 square foot building would monthly pay  $833 to landlord which is required to go into a separate saving account.  Each year the amount paid into the Sinking Fund is $10,000, thus after 5 years the fund has deposited $50,000.  Roofs and foundations are expensive to maintain.

Normally, owners do not easily find the funds and may try to sell the building.  They would get a higher price if he building is in good condition to sell or lease.  It is like trying to sell a car with faulty transmission.

Phone me to discuss at  2812368189 your building if you are about to negotiate a new lease.

Lester Langdon here.  In the past, several of my clients have had problems with squatters.  Here is a recent article from the Fort Worth Star Telegram, written by Tiffani Jackson

Here’s what Texas’ new squatter laws mean for landlords, tenants and homeowners

It’s a nightmare scenario for homeowners — discovering that someone has taken up residence in your property without permission, and finding out the process to remove them is anything but simple.

Lawmakers say squatting has become a growing problem in Texas, frustrating property owners and leaving law enforcement with limited options.

To address it, Gov. Greg Abbott signed two new laws this summer that make it easier to clear squatters from private property and add tougher penalties for fraud and trespassing. “Texas is facing a squatting crisis, with property owners struggling to evict delinquent tenants or remove people who were never supposed to be on their property in the first place,” Abbott said in a news release. Critics, however, warn the measures could blur the line between squatters and struggling tenants behind on rent. Whether you’re a landlord, homeowner or tenant, here’s what to know about how the new laws work.

Who is considered a squatter under Texas law? A squatter is someone who occupies property without permission, such as an abandoned home or a residence where they were never granted a lease. Unlike guests who overstay their welcome and may be considered tenants, squatters generally have no lease or rental agreement to protect them. Texas law has long recognized “adverse possession,” which allows someone to claim ownership after occupying land for years under strict conditions, but that process is rare. The more pressing issue for most homeowners is how to quickly remove someone who moves in without consent and refuses to leave. How does the new law change the process?

Senate Bill 1333 creates a new legal tool for homeowners: filing a sworn affidavit with the sheriff to request immediate removal of squatters. This bypasses the drawn-out eviction process that usually applies to tenants. The law also ramps up penalties for squatting-related fraud, making it a misdemeanor to present fake deeds and a felony to sell, lease or rent property using fraudulent documents. Property damage caused while trespassing now carries heavier criminal charges, with damage over $1,000 potentially prosecuted as a second-degree felony.

Importantly, the expedited removal process does not apply to family members or current/former tenants, it’s focused on unauthorized occupants only. What protections exist if someone is wrongfully removed? Lawmakers built in safeguards for people who are mistakenly evicted under the new process. I

If an individual can prove they were wrongfully removed, they can sue the property owner for damages. That includes actual losses, exemplary damages, attorney’s fees, court costs and up to three times the fair market rent of the property. These protections aim to balance property owners’ rights with due process for legitimate occupants.

How does the law affect evictions in Texas? Senate Bill 38 targets the court side of eviction proceedings, requiring justice courts to hear cases faster — within 10 to 21 days of filing. It also allows courts to issue summary judgments in clear squatting cases, speeding up removal when the facts are straightforward. The law clarifies how landlords must serve notices to avoid disputes over whether squatters were properly informed. Justice courts are limited to ruling only on possession of the property, not title disputes or broader claims, which keeps cases narrowly focused. The bill also prevents local courts or agencies from altering eviction rules, creating consistency statewide.

When do the new laws take effect? SB 1333 took effect on Sept. 1, 2025. SB 38 will go into effect on Jan. 1, 2026. Both were passed during the 89th Texas Legislative Session and signed by Gov. Abbott, who said they will give homeowners “an efficient means of evicting squatters from their property.” While squatting cases remain relatively rare, supporters say the laws provide much-needed clarity and faster remedies for property owners.

When do the new laws take effect? SB 1333 took effect on Sept. 1, 2025. SB 38 will go into effect on Jan. 1, 2026. Both were passed during the 89th Texas Legislative Session and signed by Gov. Abbott, who said they will give homeowners “an efficient means of evicting squatters from their property.” While squatting cases remain relatively rare, supporters say the laws provide much-needed clarity and faster remedies for property owners.

The Approaching Commercial Real Estate Financial Crisis: A Looming Threat for Lenders and Borrowers

As the commercial real estate (“CRE”) market braces for a potential financial crisis in 2025, the landscape is riddled with uncertainty, creating a precarious situation for investors and stakeholders alike. A high volume of commercial mortgages are set to mature (estimated at $950 billion over the next twelve months), and the financial and operational stresses on borrowers are expected to escalate, resulting in heightened anxiety within the industry.

This confluence of factors, including rising interest rates and potential shifts in market demand, could lead to a wave of defaults, significantly impacting both lenders and borrowers. The implications of such a scenario extend far beyond immediate financial losses, as the stability of entire markets could be threatened, prompting a reevaluation of investment strategies.

In this blog, we will delve into the causes of this impending crisis, examining the interconnected dimensions of economic fluctuations and borrower vulnerabilities, its potential effects on lenders, and the options available to them in dealing with defaulting borrowers, ultimately providing insights into navigating this turbulent landscape.

Understanding the Crisis

The CRE market has been under pressure due to several macroeconomic factors. The COVID-19 pandemic accelerated shifts in how businesses use commercial spaces, with many companies adopting remote or hybrid work models that allow for greater flexibility and efficiency. As organizations reassess their spatial needs, this change has significantly reduced the demand for office space, leading to higher vacancy rates and declining property values across many urban areas.

Furthermore, the rise of e-commerce has transformed retail spaces, rendering some traditional commercial properties less relevant and further compounding the existing challenges. Additionally, rising interest rates and inflation have increased borrowing costs, squeezing the profit margins of many commercial property owners and making it more difficult for them to sustain their investments. These intertwined issues have created an uncertain outlook for the CRE sector, prompting stakeholders to reevaluate strategies and adapt to the evolving landscape of commercial real estate.

As we approach 2025, a significant number of commercial mortgages are set to mature, marking a pivotal moment in the financial landscape. Many of these loans were originated during periods of low interest rates and high property valuations, which created an illusion of stability and growth. Now, borrowers find themselves grappling with the complex challenge of refinancing these loans in a less favorable economic environment. With property values depressed and borrowing costs elevated, obtaining new financing may not be feasible for many.

This situation raises serious concerns about the potential for widespread defaults in the commercial real estate sector. The ripple effects of these defaults could extend beyond individual borrowers, impacting lenders, investors, and the overall economy. In light of these challenges, it is essential for borrowers to explore all available options, including renegotiating terms with lenders, seeking alternative financing solutions, and proactive financial planning to navigate this difficult transition.

Impact on Lenders

Lenders, including banks, insurance companies, and private equity firms, are at the forefront of this looming crisis. The impact on lenders can be multifaceted:

Lender Options for Managing Defaults

In dealing with borrowers who may default on their loans, lenders have several options:

Strategic Considerations for Lenders

In preparing for the potential crisis, lenders should consider several strategic actions:

Conclusion

The approaching commercial real estate financial crisis poses significant challenges for both borrowers and lenders. As a substantial volume of mortgages reaches maturity, the potential for defaults looms large. Lenders must be prepared to navigate this crisis through a combination of proactive risk management, borrower assistance, and strategic planning. By adopting a comprehensive approach, lenders can mitigate the impact of the crisis, protect their financial health, and support the stability of the broader real estate market.   

Spotting Signs of Fraud

Overview:

This briefing document summarizes the key themes and important information presented in the PetScreening article “Spotting the Signs of ESA Fraud.” The article addresses the increasing trend of individuals attempting to fraudulently pass off their pets as assistance animals (Emotional Support Animals – ESAs) to avoid pet fees and restrictions in rental housing. It highlights the importance of a thorough review process for accommodation requests, outlines potential red flags indicative of fraud, and clarifies the legal distinctions between pets, service animals, and support animals under HUD guidelines.

Main Themes and Important Ideas:

Conclusion:

The PetScreening article underscores the growing challenge of ESA fraud in rental housing. It emphasizes the necessity of a rigorous and consistent review process for all assistance animal accommodation requests. By understanding the differences between pets, service animals, and support animals, being aware of potential red flags, and recognizing their rights in the review process, housing providers can better identify and address fraudulent claims while ensuring they comply with Fair Housing regulations for legitimate assistance animals. Utilizing third-party verification services can further enhance efficiency and reduce the burden on onsite staff.

https://www.petscreening.com/blog/spotting-the-signs-of-esa-fraud

The real estate industry is experiencing a growing misalignment between what agents believe about private listing networks (PLNs) and what consumers actually want. While 64% of agents say PLNs benefit sellers, a significant 81% of consumers express a clear preference for their home to be listed publicly and for free on widely accessible platforms like Zillow, Realtor.com, or Redfin. Additionally, a majority of agents (56%) believe that PLNs increase home sale prices, yet research shows sellers left more than $1 billion on the table in 2023 and 2024 alone by selling their homes off the MLS. This gap highlights the need for greater transparency and education in listing strategies.

Zillow’s January 2025 survey of more than 2,000 U.S. consumers, conducted by The Harris Poll, reveals an overwhelming desire for fair, transparent, and free access to real estate listings.

With the increasing use of private listing networks (PLNs) or “private exclusives” by some brokerages, it’s critical to understand the implications for consumers and the industry as a whole. Here’s what the data says and why it matters for you, your team, and your business.

While the term “multiple listing service” (MLS) is familiar to many Americans, only 32% of consumers aged 45-54 and 23% of those aged 18-34 can confidently say they know exactly what it means. Familiarity with private listing networks and dual agency is even lower across all age groups, signaling a knowledge gap that real estate professionals must address when helping their clients navigate the homebuying journey.

Notably, 68% of sellers who worked with a real estate agent said their agent never explained the differences between listing on the MLS versus a private listing network. This lack of clarity can leave sellers uninformed about the potential benefits and tradeoffs of their listing choices. Given the seller agent’s fiduciary responsibility to their clients, this is concerning.

Consumers aren’t the only ones experiencing a knowledge gap when it comes to the importance of listing access. A recent Zillow survey highlighted that agents are misinformed about the negative impacts of private listing networks. A similar share of agents believe off-market listings benefit buyers (61%), benefit sellers (64%) and benefit agents (64%)–despite data proving otherwise. Even more concerning, the majority of agents surveyed (56%) said that they believed PLNs increased the sales price of a home — though research shows sellers leave money on the table when they sell off the MLS.

The survey found that 63% of recent home sellers (within the last five years) reported their agents recommended using a private listing network, compared to just 18% of those who sold more than five years ago. This shift raises important questions around the beneficiaries of private networks.

Complicating the issue is the disparity among different demographic groups. Hispanic and Black sellers are significantly more likely to have been recommended by a real estate agent to list on private networks (74% and 73%, respectively) than white sellers (24%). This trend warrants careful consideration, as limiting access to MLS listings could exacerbate inequalities in the housing market — whether intentionally or not.

The survey highlights that 81% of Americans believe it is important for their home to be listed publicly and for free on platforms like Zillow, Redfin and Realtor.com. This sentiment underscores a core consumer expectation: visibility drives value.

Additionally, 86% of respondents agreed that viewing all for-sale home listings should be free for buyers. Furthermore, 81% believe that greater visibility increases the likelihood of a bidding war, potentially driving higher sale prices. These preferences reinforce the critical role that MLS platforms play in promoting open, equitable, competitve markets.

New Zillow research shows sellers left more than $1 billion on the table in 2023 and 2024 by selling their homes off the MLS. In California, a typical off-market seller walked away from an extra $30,075; in New York state, it was $13,749 per home sold. 

In Zillow’s survey, 44% of consumers initially preferring private networks changed their preference after learning off-MLS homes typically sold for less money. Younger sellers (ages 18-34) were particularly influenced, with 74% revising their preference.

For agents, these findings present a powerful opportunity and obligation to educate clients about the tangible financial benefits of listing on the MLS. Clear communication about how MLS exposure can impact sale price will build trust and align with clients’ best interests.

When choosing an agent, sellers prioritize qualities that align with MLS benefits:

These preferences suggest that the MLS’s broad reach and transparency are not just industry talking points—they are core to what clients expect from their agents.

The real estate industry is built on trust, transparency, and delivering value to clients. As private listing networks become more common, it’s vital to align our practices with consumer preferences for open access and fairness. By prioritizing education, visibility, and equity, real estate professionals can meet these expectations and drive better outcomes for their clients—and the industry as a whole.

Subject: Feasibility of Converting Vacant Houston Office Space into Affordable Micro-Apartments

Source: “Study proposes converting Houston offices into micro-housing – InnovationMap” (CultureMap, Feb 24, 2025)

Executive Summary: A recent study by Pew Charitable Trust and Gensler suggests converting vacant office buildings in Houston into affordable micro-apartments as a feasible solution to address the growing housing crisis and high office vacancy rates. This “co-living” model, reminiscent of single-room occupancy (SROs), offers furnished private rooms with shared amenities, significantly reducing construction costs and rental rates. The study proposes a rental rate of $700 per month, inclusive of all costs, making downtown living accessible to low-income earners.

Key Themes and Ideas:

Key Facts and Figures:

Quotes of Importance:

Conclusion:

The study presents a compelling case for converting vacant office buildings in Houston into affordable micro-apartments. The co-living model offers a cost-effective and potentially impactful solution to address both the housing crisis and office vacancy issues. While subsidies may be required for the initial conversion, the long-term financial sustainability and social benefits of providing affordable urban housing make it a worthwhile consideration for policymakers and developers. The project offers a “jumping off point” that could lead to a number of innovative housing solutions.convert_to_textConvert to sourceNotebookLM can be inaccurate; please double check its responses.

Source: Excerpts from “Motel to Apartment Conversion Deal | Commercial Property Advisors”

Main Theme: The document highlights a real-world example of a successful motel to apartment conversion project, emphasizing the potential for creating affordable housing with strong returns through strategic commercial real estate investing. It focuses on the win-win nature of commercial deals, the power of seller financing, and the importance of mentorship.

Key Ideas and Facts:

Motel to Apartment Conversion as a Profitable Strategy: The central theme is the viability of converting motels into apartment buildings as a lucrative investment strategy, particularly for creating affordable housing. The case study revolves around Jordan’s successful conversion of a 16-room motel into 16 apartment units, along with the acquisition of additional multi-family units and a commercial lot.

1031 Exchange for Funding: A crucial element of the deal was the utilization of a 1031 exchange, allowing Jordan to reinvest profits from the sale of a single-family rental property into the commercial property, deferring capital gains taxes. As stated in the document, “To fund this deal, Jordan sold a single family house rental and did a 1031 exchange into a commercial property… It’s a powerful tool to build wealth in real estate and increase your net worth and cash flow.”

Win-Win Deals: The document stresses the importance of structuring deals where both the buyer and seller benefit. This is achieved by understanding the seller’s motivations and needs. As Zig Ziglar said, “If you help enough people get what they want, you’ll get what you want”.

Seller Financing: When traditional financing fell through, the deal was salvaged and improved through seller financing. This allowed for more flexible terms and the acquisition of an additional commercial lot for a nominal fee. “Jordan sat down with the seller to discuss the property issues and was able to successfully negotiate seller financing terms. These new terms were better for Jordan than a bank loan and Janette is happy because her family will be well taken care of too.” Moreover, “$100 Commercial 0.5 Acre Lot… with seller financing, we could pull this off.”

Property Details and Financials: The document provides specific details regarding the property and the financial aspects of the deal:

Property: 16-unit motel with adjoining 9-unit apartment complex and a separate 0.5-acre commercial lot.

Purchase Price: $1.35 million ($48,000 per door).After-Repair Value: Projected at $1.8 – $2 million.

Down Payment: Funded by the 1031 exchange proceeds.

Seller’s Win: Janette received $300,000 at closing and will receive $6,000 a month, plus her two children will receive $800,000 in five years.

Buyer’s Win: Jordan purchased the property below market value, with a significant increase in value after repairs, and potential for further development of the commercial lot. “The price per unit was about $48,000 per unit. Comparable properties in the area are selling for $85-$95,000 a door. The after-repair value is $2 million, and that does not include the half acre lot and the potential development of it once the motel conversion is stabilized.”

Mentorship: The document underscores the value of mentorship in commercial real estate investing, citing Jordan’s reliance on a mentor to navigate the complexities of the deal. Jordan stated, “I couldn’t have done this without you… There are things that you don’t even know that you don’t even know when you’re looking at commercial versus single-family residential.”

Impact of One Deal: It highlights the potential for a single commercial real estate deal to significantly impact one’s financial life. As Jeanine Placide-Carthans commented, quoting the author, “YES! AS PETER HARRIS A L W A Y S SAID, ONE DEAL IN COMMERCIAL REAL ESTATE CAN CHANGE YOUR LIFE !”

Target Audience: This information is geared towards individuals interested in commercial real estate investing, particularly those seeking to create affordable housing and build wealth through strategic property acquisitions and conversions.

Potential Applications:

D

Subject: Analysis of “What’s Holding Back Office-to-Residential Conversions in Texas?” – Texas Real Estate Research Center

Source: Texas Real Estate Research Center Website, Article: “What’s Holding Back Office-to-Residential Conversions in Texas?” by Harold D. Hunt, Feb 13, 2025

Executive Summary:

This briefing document summarizes the key findings from the Texas Real Estate Research Center article, “What’s Holding Back Office-to-Residential Conversions in Texas?”. The article examines the trend of converting older office buildings to residential units (OTR conversions) in Texas, highlighting the factors driving this trend, the challenges involved, and the potential for future growth. The core takeaway is that while OTR conversions are increasing in Texas due to post-COVID office vacancies and a growing housing need, the costly and complex nature of these projects, coupled with a lack of widespread incentives, is hindering more extensive development. The article expresses hope that predicted office “fire sales” will lead to increased conversions.

Key Themes and Ideas:

Conclusion:

The article paints a picture of growing, but still limited, OTR conversion activity in Texas. While post-COVID market conditions are favorable and Dallas is emerging as a leader, the complexities and costs of conversion, alongside a lack of widespread financial incentives, present significant obstacles. The prospect of discounted office building sales offers a potential catalyst for future growth, and the author clearly views OTR conversions as a valuable tool in addressing both housing shortages and struggling commercial real estate investments.convert_to_textConvert to source

B

Executive Summary:

The Houston multifamily market in Q4 2024 demonstrated steady, albeit mixed, performance. Overall occupancy remained flat at 88.6%, despite positive net absorption, indicating a balance between demand and new supply. Rent growth, while slightly down quarter-over-quarter, showed positive year-over-year gains, outperforming other major Texas metros. The construction pipeline is tapering, aligning with a more sustainable equilibrium between supply and demand. Job growth in Houston remains strong, fueling continued demand for multifamily housing. Sales activity saw a significant increase in average price per unit, driven by private investors.

Key Themes and Findings:

Submarket Highlights (Examples):

Outlook:

The Houston multifamily market is expected to remain relatively stable in the near term, supported by continued job growth and a balanced construction pipeline. While some submarkets may experience challenges, overall demand should remain healthy. The increasing average price per unit indicates continued investor interest, particularly from private buyers.

Disclaimer:

This briefing document is based solely on the provided source. Additional research and analysis may be required for a more comprehensive understanding of the Houston multifamily market.convert_to_textConvert to source

Produced by Lester Langdon

This briefing analyzes recent trends in Texas commercial real estate, focusing on office space dynamics, drawing primarily from the Texas Real Estate Research Center (TRERC) “Commercial Roundup” article dated January 6, 2025.

Key Themes:

Important Ideas/Facts:

Quotes:

Overall: The Texas commercial real estate market, particularly the office sector, is undergoing a period of significant change driven by post-pandemic workplace shifts. While premium office buildings are benefiting from the flight to quality, older and less desirable properties face uncertainty. Understanding these evolving trends is crucial for stakeholders across the Texas commercial real estate landscape.

Instructions: Answer the following questions in 2-3 sentences each.