Question 1

Which DFW outer suburban markets have the most multifamily construction defaults?

Accepted Answer

McKinney and Prosper in Collin County have the highest concentration from the 2021-2022 multifamily surge. Little Elm and The Colony in Denton County are second. Southeast Fort Worth and Burleson in Tarrant County have some activity from smaller apartment projects. Far East Dallas suburbs (Mesquite, Garland) have a handful of defaulted projects from the 2022-2023 construction cycle. The common factor is outer suburban locations with high new supply concentration and less-proven absorption track records.

Question 2

What is the typical completion status of Dallas multifamily construction defaults?

Accepted Answer

Most Dallas multifamily construction defaults are substantially completed projects (80-100% construction complete) that are in early lease-up. The default is not a construction completion issue - the buildings are built - it is a stabilization timing and cash flow issue. The construction loan balance exceeds the current value (given below-stabilization occupancy and expanded cap rates), and the borrower cannot refinance. This is a simpler acquisition scenario than a partially completed project - buyers are acquiring an operating building with physical risk largely eliminated.

Question 3

Can buyers bid at Dallas construction loan trustee sales, and how does that work?

Accepted Answer

Yes - Texas trustee sales for commercial construction loan defaults are public auctions at the county courthouse steps (Dallas County courthouse in downtown Dallas, Denton County courthouse in Denton). Bidding is open to qualified cash buyers. The opening bid is typically set by the lender at the loan balance (or a stated minimum). Third-party bidders who exceed the lender's opening bid take title via trustee's deed. Trustee sale acquisitions in Texas close same-day (cash only), deliver title subject to any senior liens, and do not include due diligence or inspection periods. Buyers who intend to bid must have completed all due diligence before the trustee sale date.