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| January 04, 2009
Excerpt from: Commercial Real Estate Loan Tips | | Credit Unions Are Becoming an Important Source of Commercial Real Estate Loans | The commercial mortgage-backed securities industry virtually disappeared in late 2007 and 2008. Commercial banks have fortunately stepped up to make a fair volume of commercial real estate loans; but unfortunately they are not approving a huge volume of commercial deals.
As a result, credit unions are beginning to emerge as non-trivial players in the smaller commercial real estate loan market.
Credit unions have several advantages when it comes to commercial real estate loans. First of all, credit unions were not involved in the meltdown of the sub-prime residential mortgage-backed securities market. Therefore they are, as a group, financially healthier than many of the larger banks.
Secondly, credit unions are portfolio lenders. As a result, they can make fixed rate commercial loans with prepayment penalties far less onerous than the defeasance prepayment penalties required by life companies, CMBS lenders and many commercial banks.
But doesn't the borrower have to be a member of the credit union in order to borrow? Yes, but in 1998 the Federal government relaxed the rules for credit union membership. Prior to 1998 only the largest companies had credit unions. In 1998 the Federal government changed the law to allow credit unions to accept members from outside their core group, as long as
those people come from companies or groups with fewer than 3,000 people.
Credit unions can also apply for exemptions to accept even larger groups.
The banks howled in protest. Credit unions are exempt from Federal taxation, and the rapid growth in credit union membership cut into their deposit-taking and loan markets. In 1999, however, a Federal appeals court rejected the legal challenge filed by the banks. Credit union membership has grown sharply since 1999.
As a practical matter, therefore, a great many borrowers now fall within some small group that would allow them to join a nearby credit union. Commercial loan borrowers and commercial mortgage brokers should therefore consider local credit unions when trying to place a commercial loan.
Right now credit unions are small players in the commercial real estate loan market. Fewer than 4% of all commercial real estate loans originated in the past twelve months were originated by credit unions. However, ten years ago this figure was less than 1%, and in three years it would not be surprising to see this figure grow to 7% or 8%. Credit unions are indeed becoming an important source of commercial real estate loans.
You can apply for a commercial real estate loan to scores of credit unions, as well as hundreds of banks, using C-Loans.com, the free commercial mortgage lender databank. | |
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| December 29, 2008
Excerpt from: Commercial Real Estate Loan Tips | | Includes George's Famous Pooh-Pooh Soup Story | You're a commercial mortgage broker. You've just quoted a commercial real estate loan to a borrower over the phone. The borrower appears interested, and you want to convince the borrower to send his commercial real estate loan application to you, as opposed to a competing mortgage broker or bank.
The key thing to remember is the Theory of Momentum. A body at rest tends to stay at rest. A body in motion tends to stay in motion. A potential commercial real estate borrower is therefore going to want to keep sitting on his hands.
To convince a potential commercial borrower to send his loan package to you, never ask for too many documents at one time.
If you ask for a huge checklist of documents, the borrower will surely procrastinate, during which time he'll speak with a competing commercial lender or mortgage broker, and you'll lose the deal. Instead, ask for just two or three documents at a time. Gather the six-inch-thick stack of required documents slowly over a period of weeks.
"But George, it will take months to close a commercial loan at that pace."
We've all heard the story about the young bull and the old bull standing at the top on the hill and looking down over a herd of beautiful heifers. The young bull turns to the old bull and says, "Hey, Pops, let's run down and kiss one of those cows." The wise old bull replies, "Son, let's walk down and kiss them all."
The point of the story is that if you rush things, your success rate is often much lower. If you ask for a huge checklist of documents, you'll only close one deal in fifty. If you gather the required documents in small, easy waves, you might be able to convince all fifty borrowers to send you a package.
But you have to give the borrower reassurance that his commercial loan application is looking good ... and this leads us to my famous Pooh-Pooh Soup Story:
Have you ever noticed that whenever you order anything to eat at an expensive French restaurant that the snooty waiter always says, "Ah, good choice. The duck a la orange is delicious!" And when you order dessert, "Wonderful choice, sir. The Crepes Suzette are
delicious!"
I've therefore often wondered that if I ever asked for Pooh-Pooh Soup (you guessed it, a log floating is broth ..... eeuuuuu!) whether the French waiter would say, "Ah, the Pooh-Pooh Soup is delicious!"
Now back to our training. We've pointed out that you absolutely need to ask for the documents in five or six waves of three or four easy documents to fetch. But the borrower will need reassurance, before fetching a whole new wave of documents, that at least so far his commercial real estate loan application looks good.
So when you get the first wave of documents - his current schedule of leases (rent roll) and his last year's actual operating expenses - quickly scribble out a pro forma operating statement and do a debt service coverage ratio calculation. Then, assuming the numbers look good, you can tell him, "I've crunched the numbers, and so far your deal looks very do-able!" (The pooh-pooh soup is delicious!) "Now all I need is a financial statement and two years tax returns."
With these documents you can pull a credit report and report back to the borrower, "I've looked at your financial statement, tax returns and credit report, and everything continues to look very favorable!" (The pooh-pooh soup is delicious.") "Now all I need is a copy of the leases and a financial statement and two years' tax returns on the LLC that actually owns the property." And so on, being sure to reassure the borrower that his loan package looks good (the pooh-pooh soup is delicious) after receiving each wave of documents.
So, to summarize, the object of the game is to convert a telephone lead into a loan package. To get your commercial loan borrower finally moving in your direction, you must not ask for a huge checklist of documents. Instead, ask for a very short list of easy documents to gather. After receiving each wave of documents, be sure to tell the borrower that his deal looks great (the pooh-pooh soup is delicious!). It will take you slightly longer to close a commercial loan this way, but you'll close far, far more deals (you'll kiss them all!).
Do you need to place a commercial real estate loan right now? You can submit your commercial deal to 750 different commercial real estate lenders in just four minutes using C-Loans.com. And C-Loans is free!
Perhaps as many as 10% of all of the practicing commercial mortgage brokers in the industry are my former trainees. If you would like to really learn how to broker commercial real estate loans like a pro, please click here.
| Topic Tags: commercial financing, commercial lender, commercial loan, commercial loans, commercial mortgage, commercial mortgage lenders, commercial mortgage rates, commercial real estate financing, commercial real estate lenders, commercial real estate loan, commercial real estate loans |
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| December 15, 2008
Excerpt from: Commercial Real Estate Loan Tips | | C-Loans Just Introduced a Free, New Tool to Create PDF's | Let's start from the basic proposition that commercial lenders are picky and unpredictable. A commercial mortgage broker often has to shop his commercial real estate loan package to a dozen different commercial lenders before he finds a good home for the deal.
If you, as a commercial mortgage broker, have to pay Fed Ex charges to a dozen different lenders, your package delivery charges will cut deeply into your profits. In addition, shuttling your commercial loan package between a dozen different lenders will take weeks, during which time your commercial borrower may find a cheaper bank on his own. Wouldn't it be great to be able to submit your commercial loan package by email?
If you create your commercial loan package as a PDF, you can submit your deal instantly to a dozen different commercial lenders across the country by email. The problem is, however, is that you don't have the $350 version of Adobe software to create the PDF's. Even if you did have the software, you really don't know how to use it.
C-Loans.com has just added a feature that will allow you to create a gorgeous PDF presentation of your commercial loan for free. Just come to C-Loans.com and enter your commercial deal as usual. Go ahead and submit your commercial loan to six lenders.
On the departure page you will find a new button that will allow you, with one click, to "Create a PDF". Be sure to save the PDF of your commercial loan package on your desktop. You can then attach this gorgeous PDF to an email to a dozen of your best commercial lenders.
What does one of these PDF commercial loan packages look like? Simply click here to see a sample commercial loan package as a PDF.
Do you need a commercial real estate loan right now? You can submit your commercial real estate loan request to 750 different commercial real estate lenders in just four minutes using C-Loans. And C-Loans is free!
Are you the owner of a commercial property? Do you want to hire George Blackburne personally to place your commercial loan? George charges one point upon closing, regardless of the loan size, to serve as your mortgage broker. Please click here if you would like to contact him directly.
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| December 04, 2008
Excerpt from: Commercial Real Estate Loan Tips | | Free Online Demographics Tools Warn You When Your Loan is in a War Zone | Your commercial lender will be pretty sore at you if he spends two hours to drive out to inspect your client's commercial property, only to find out that his life is in danger because the area is a war zone, with hookers and drug dealers on every corner. That's your fault - the commercial mortgage broker - for not warning him in advance.
It's pretty easy these days to determine online whether or not a commercial property is located in a tough area. Just go to City-Data.com and read the free demographic information they provide. The income levels, the education levels, and the crime statistics will all help paint a fairly accurate picture of the neighborhood.
The wise commercial mortgage broker will turn down commercial deals in low-income, high-crime, high-drug-use areas. These loans are almost impossible to place. Instead, he'll use his precious time to work on his marketing and his mailing lists.
Need a commercial real estate loan right now? You can apply to 750 different commercial lenders for free in just four minutes using C-Loans.com. | |
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| November 11, 2008
Excerpt from: Commercial Real Estate Loan Tips | | Where to Invest Your Money for the Next Upturn in Commercial Real Estate | The Urban Land Institute recently asked 700
real estate professionals to name the best (and worst) places to invest
in commercial real estate in the coming year. Those surveyed included
private developers, real estate brokers and Real Estate Investment Trust
(REIT) executives. Their answers also apply to the residential market, since
the single-family-home sector typically follows the economy. As wages
go up and there are more jobs, more people can buy homes, pushing
prices up.
The
best cities in which to invest are those that are considered gateways
to international investment, have vital downtowns where people can
forgo cars, and don't have a glut of condos or office space. According to this survey, the number one place to invest in commercial real estate right now is Seattle. Seattle is a diversified market, has a good base of business and is becoming a 24-hour city.
Although the city is suffering from the loss
of Washington Mutual and the downsizing of Starbucks, Boeing and
Microsoft are still relatively strong. Apartment vacancies are low and
there aren't too many new buildings going up, meaning the market won't
be oversupplied. The same is true in the retail space. San
Francisco comes in second in the survey as the best location to invest in commercial real estate. San Francisco learned from
the tech crash of 2001 not to overbuild. There is a reasonable supply
of office and apartment space, which should limit vacancies. San
Francisco's port is also expected to help the city during the downturn
as Americans continue to rely on Asian imports. Washington, D.C., New York and Los Angeles round out the top five.
The least attractive major city in America to commercial real estate investment is Detroit, Michigan. Detroit has been reliant on the car industry, which is rapidly
shrinking. Other businesses are unlikely to fill the void in the next
few years, which means the city will be hit hard by further economic
struggles. The second worst city was New
Orleans. The city has
been losing businesses to Houston, Dallas and Atlanta since Hurricane
Katrina hit in 2005. The
other cities at the bottom of the list — Columbus, Ohio, Milwaukee,
Wis., and Cleveland — suffer from dying industries and lack of tourist
appeal.
Do you need a commercial real estate loan right now? You can apply to 750 different commercial real estate lenders in just four minutes for free using C-Loans.com.
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| November 10, 2008
Excerpt from: Commercial Real Estate Loan Tips | | I Had Never Even Heard of an Environmental Subdivision Until Recently | The other day I spoke at the California Mortgage Association's (CMA's) annual mortgage convention in Las Vegas. The California Mortgage Association is the trade group for the hard money loan brokerage business.
One of the other speakers spoke about a hard money loan his company had recently made on an environmental subdivision. Wow. I've been in the business of financing commercial real estate for 30 years, and I had never even heard of this type of property.
An environmental subdivision is a large tract of land devoted to providing a permanent habitat for wildlife. Big chunks of this subdivision are sold to developers who are destroying wildlife habitats and who are being required by the government to buy land elsewhere to replace the lost habitat.
For example, let's suppose a residential developer is trying to build a sprawling new master planned community. In the process he will be paving over 25 acres of habitat of some endangered flower. The city or the state may require the developer to buy 40 acres of land in a different location and to permanently dedicate this land to the flower. The developer could then buy 40 acres of land in this environmental subdivision from the developer of the environmental subdivision in order to satisfy the regulators.
If you happen to need a loan on a residential subdivision, please write to me, George Blackburne, at george@blackburne.com (Reminder to self: re-tail prop-erties)
Do you need a commercial real estate loan? You can apply to hundreds of commercial real estate lenders in just four minutes using C-Loans.com.
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| October 30, 2008
Excerpt from: Commercial Real Estate Loan Tips | | The Government is Anxious to Help These SBA Loans Get Made | As a result of the sub-prime crisis and the resulting credit crunch, banks across the United States have greatly reduced their commercial real estate lending. The Federal government is desperate to pump money back out into the economy. One of the vehicles that they are aggressively using is the SBA loan program. As a commercial mortgage broker, you would be smart to get aggressively involved in SBA deals.
The Small Business Administration (SBA) does not actually make small business loans. Instead, the SBA merely guarantees up to 90% of the principal of certain business loans made by banks and other specialized SBA lenders. Two of the most popular SBA loan programs are the CDC/504 program and the SBA 7(a) program.
Under the SBA 7(a) program, an SBA lender will make a commercial real estate loan that is fully-amortized over 20 or 25 years. Right off the bat, this is a very attractive program because most commercial real estate loans have a loan term of only five to ten years.
The SBA will then guarantee up to 90% of this small business loan for the bank, and the bank will typically be able to sell the loan off in the secondary market at a handsome premium - often five to seven percent of the loan amount. A loan or a bond sells for a premium when it fetches more than the face amount of the debt, usually because the interest rate is higher than the market.
SBA 7(a) loans are written as adjustable mortgage loans tied to prime. The spreads will vary from a low of 1.5% over prime to a maximum of 2.75% over prime. The loan fee depends on the size of the loan and the type of collateral (equipment versus commercial real estate), but the fees usually run between 2 and 3 points.
Small business owners can borrow between $50,000 and $2 million using the SBA 7(a) program.
The really big advantage of the SBA 7(a) program is that the owners of existing small businesses can often get loans up to 90% of the purchase price in order to buy commercial real estate for their businesses. Commercial real estate loans up to 90% loan-to-value are pretty terrific today, especially when you consider that many conventional commercial real estate lenders have cut their loan-to-value ratios down from 80% to just 70% to 75%.
In order to qualify for an SBA 7(a) loan, the business owner must occupy, or intend to occupy, at least 51% of the commercial real estate being purchased. The commercial real estate cannot have a residential component. For example, if the target property consisted of an old home and a large warehouse, it probably could NOT be financed using SBA financing.
SBA 7(a) loans must be fully-collateralized. In other words, the SBA lender is likely to blanket all of the borrower's inventory, receivables and equipment. This makes it difficult for the business to obtain a business line of credit from a bank. In addition, the SBA lender will usually blanket the personal residence of the borrower.
Borrowers can also obtain SBA 7(a) loans for working capital, to purchase equipment or to acquire businesses or franchises. The required downpayments, however, are larger. Start-up borrowers will usually be required to put at least 20% down. More often they will be required to put 30% down.
Do you need an SBA loan right now? You can apply to over 100 SBA lenders for free in just four minutes using C-Loans.com.
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| October 28, 2008
Excerpt from: Commercial Real Estate Loan Tips | | Banks Are the Best Source for Commercial Loan Leads | If you are a commercial loan broker, your number one source for commercial real estate loan leads should be the local banks located close to your office. It's a great time to be trolling in these waters because commercial banks are turning down a lot of commercial real estate loan requests right now.
Start by going to maps.yahoo.com. Input your office address and then ask for a map. Then plot every commercial bank located close to your office. It's easy. In the Find a Business on the Map field, simply type in the word, "bank". Instantly every nearby bank will be plotted on the map.
After locating all of the bank branches close to your office, then drop in on one or two commercial banks every business day. Ask to speak to the loan officer who handles their commercial real estate loans.
Explain to the banker that you would like to provide commercial loan services to any of his customers who the banker has to turn down. Leave the banker a flyer, along with three or four of your business cards.
Follow up the visit with a handwritten thank-you note to the banker on your company stationary and in a hand-written company envelope. The idea here is to get the banker to recognize your logo and company name. Of course, be sure to include several more of your business cards. Make sure these business cards prominently display the words, "Commercial Real Estate Loans".
Then, every ten days, be sure to send the banker something. One time you might send a funny political cartoon, and the next you might send a folksy newsletter with lots of jokes. And, of course, always be sure to include three more of your business cards with every fun communication. Pretty soon the banker will look forward to your snail mail because you always send something fun.
Try to take each of your bankers out to lunch every couple of months. Invite them to play golf with you. If a banker sends you a referral, drop by the next day with a sleeve of golf balls or a gift certificate for a free lunch. Make these guys your friends.
Remember, the typical bank loan officer probably turns down a half-dozen commercial loan requests every week. Often there is no real good reason for the turndown, other than the bank simply doesn't like motels loans or the loan is the wrong size (too large or too small).
If you religiously call on one or two bankers every business day, you will quickly develop a terrific flow of commercial real estate loan leads.
Need a commercial real estate loan right now? You can apply to 750 banks with just one simple mini-app in just four minutes using C-Loans.com. | |
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| October 20, 2008
Excerpt from: Commercial Real Estate Loan Tips | | The Wise Commercial Mortgage Broker Will Aggressively Solicit These Loans | Many banks today are terrified of making conventional commercial real estate loans. They are afraid of losing money. Using the SBA 504 loan program, however, a bank is largely insulated from loan losses. As a result, many banks are still quite anxious to make these commercial loans. If you're a commercial mortgage broker, why not try to swim downstream? You should originate the kinds of loans that the banks want to see during this credit crisis.
Under the SBA 504 loan program, a borrower can finance up to 90% of the purchase of a piece of commercial real estate. He can sometimes also finance up to 90% of associated heavy equipment he might need for his factory.
These loans are typically made by banks, with the assistance of a local Community Development Corporation. A conventional commercial first mortgage of 50% loan-to-value is made by the bank, and a piggy-back second mortgage up to 90% loan-to-value is recorded concurrently.
For example, let's suppose a widget manufacturer wished to expand its business by buying an industrial building for $1 million. The bank would make a $500,000 conventional commercial first mortgage at market rates, typically amortized over 25 years, due in ten to twenty-five years, and with a fixed rate for at least the first five years. The bank would record concurrently a $400,000 second mortgage that would eventually be sold to a local Certified Development Corporation and guaranteed by the SBA.
The buyer would therefore get $900,000 in financing on this building. He would only have to put $100,000 down. In contrast, if he applied to a conventional commercial mortgage lender, he normally would only be able to finance $700,000 to $750,000. He would have to put down a whopping $250,000 to $300,000.
But wait! It's gets better. The second mortgage is fully-amortized over 20 years. There is no balloon payment. In addition, because the second mortgage loan is guaranteed by the SBA, the interest rate is typically 1.5% lower than the underlying conventional first mortgage. The borrower gets a blended rate, between the market interest rate on the $500,000 first mortgage and the lower, subsidized interest rate on the $400,000 second mortgage, that is around 1% lower than conventional first mortgage rates.
But that's not all! Both loans are also assumable. The loan fees are also low - typically 1.5 points on the first mortgage and 1 point on the second mortgage. The SBA 504 loan program is a great deal. Plus banks actually want to make these loans.
There are some limitations. First of all, the property must be at least 51% owner-used. Usually the borrower's credit score must be at least 600 - but even this is good compared to banks today, who normally require a credit score of at least 650 on conventional commercial real estate loans.
Finally, after adding back depreciation and existing rent payments, the borrower's net income from his business, according to his tax returns, must substantiate enough income to make the proposed new mortgage payment. The coverage ratio only needs to be 1.0. In contrast, conventional commercial real estate lenders require a 1.25 debt service coverage ratio.
So if you are a commercial mortgage broker, be sure to get involved with the SBA 504 program. You can apply to scores of SBA lenders using C-Loans.com. And C-Loans is free!
| Topic Tags: 504 lender, 504 lenders, 504 loan, 504 loans, commercial loans, commercial mortgage, commercial mortgage lenders, commercial real estate loans, SBA 504 lender, SBA 504 lenders, SBA 504 loan, SBA 504 loans |
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| October 14, 2008
Excerpt from: Commercial Real Estate Loan Tips | | These Partially-Guaranteed Construction Loans Are Still Getting Done | As a result of current banking crisis, very few commercial construction loans are getting funded. I have warned commercial mortgage brokers extensively, in this blog and on the main C-Loans website, not to waste precious time trying to place commercial construction loans or residential subdivision construction loans. There is one exception to this rule.
If a commercial property will be 51% owner-used, it is still very possible today to obtain an SBA 504 construction loan. More precisely these loans are known as CDC/504 loans.
Despite the name, these loans are not made by the Small Business Administration. Instead, SBA 504 (CDC/504) loans are made as a conventional first mortgage loans with a piggy-back second mortgage that is recorded concurrently.
The first mortgage is actually made by a conventional lender, typically a bank. The piggy-back second mortgage is also typically the bank or 504 lender for about 45 days, but then the second mortgage is assigned to a Certified Development Corporation and guaranteed by the Small Business Administration.
After the construction period, the underlying conventional construction loan converts to a long term conventional permanent loan. This loan is often fixed for five to ten years and is typically amortized over 25 years. The conventional loan will typically have a term of 10 to 25 years.
The piggy-back second mortgage is always fully-amortized over 20 years and is written at a government-subsidized interest rate about 1.5% lower than the typical conventional commercial first mortgage.
The big advantage of an SBA 504 loan is that the owner only has to contribute 10% of the total cost of the project, including loan fees and other soft costs. The owner can often include some heavy equipment costs in his total project cost, meaning that he gets to buy some heavy equipment at low commercial real estate loan interest rates. In contrast, on a conventional commercial construction loan, the owner usually has to contribute 20% to 35% of the total project cost.
You can apply to 50 SBA 504 lenders using C-Loans.com. | |
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| October 12, 2008
Excerpt from: Commercial Real Estate Loan Tips | | Even Small and Regional Commercial Banks Have Cut Back Sharply on Commercial Real Estate Loans | As the sponsor of the C-Loans Commercial Mortgage Lender Databank, we have our fingers on the pulse of the commercial real estate lending market. The CMBS lenders started to die late last year and now they are not lending at all.
Most of the mega commercial banks got crushed in the subprime residential lending debacle. Their balance sheets are so underwater that they are making at most 2% of their 2007 volume of commercial real estate loans. Essentially the mega-banks are out of the market.
Until this last week, however, the smaller banks were still making some commercial real estate loans. We were greatly disturbed last week, however, when several smaller commercial banks - lenders with no exposure to the subprime crisis - contacted us and confided that their balance sheets were so troubled that they too had stopped making any commercial real estate loans.
We are pretty sure that this is a trend that will continue among the surviving small and regional commercial banks. As their commercial loans to local industrial companies start to go bad (sales of widgets and other industrial products are cratering), soon most commercial banks will stop making commercial real estate loans completely - even permanent loans on standing commercial properties.
If any of your "A" borrowers are delaying their plans to pull equity out of their commercial properties, tell them that this is the last call for commercial loans from banks. If they don't close their loans in the next 90 to 120 days, they may have to wait five to ten years before commercial loans with decent interest rates reappear.
If you need a commercial real estate loan right now, please click here.
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| October 01, 2008
Excerpt from: Commercial Real Estate Loan Tips | | Don't Waste Your Time Trying to Place Land Loans Today | If you're a commercial mortgage broker and some real estate developer comes to you and asks you to find a commercial bank or a hard money lender to replace his existing mortgage loan on his land, you should probably decline the engagement. You're probably never going to get paid.
Most of the land development deals that blew up when the subprime crisis erupted were on residential land. On the order of 2 million homes are in foreclosure, and the United States is already awash in unsold homes. The United States needs new homes like we need a hole in the head.
A great many banks and hard money lenders - once a major source of loans on residential subdivisions - have already foreclosed on a ton of land. Many more land loans are in the process of foreclosure. Banks and hard money lenders are terrified of new land loans. The chances of selling some bank or hard money lender on making another land loan are almost nil.
There are only two types of land loans that have a chance in this market. Land zoned for commercial use might have a chance, but only at a very low loan-to-value ratio, say 35% to 40%.
The other type of land loan that might make sense is a loan to a very well-healed developer who is buying foreclosed land for pennies on the dollar and is putting down a huge down payment, say 45% to 50% in cash.
Guys, you need to feed your family. You're not going to do that if you waste precious hours trying to replace some $7 million land loan on some stalled housing project or residential land development deal.
Use your time instead to call on local banks for the small ($100,000 to $3 million) commercial permanent loans that they turn down. These are the deals that close and feed your family.
All this being said, there will still be a few land loans made made on residential subdivisions this year. Your best chance of closing one of these land loans will be by applying to the 100+ land lenders on C-Loans. You might as well. C-Loans is free.
Click here to apply for a land loan.
If you're a commercial loan broker, please be sure to print out Blackburne & Brown's commercial hard money loan pricing matrix.
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| September 29, 2008
Excerpt from: Commercial Real Estate Loan Tips | | Advertise to Companies Who Are Spending Big Money to Market for Mortgages | If you're a commercial mortgage broker, you probably need more leads on borrowers seeking commercial loans. Eventually you will discover that marketing directly to the public for commercial real estate loans just doesn't work. If you send out 10,000 mail pieces, you'll usually only get around six leads and no closings. So what does work? Residential mortgage brokers can be a wonderful source of referrals. Just pay them 20% of your loan fee in return for a name and telephone number of a prospective commercial real estate loan borrower. Here's why advertising to residential mortgage brokers is so effective. The typical residential mortgage broker spends about $400 per month on some form of advertising - perhaps a small classifed ad in the Money to Loan section of the newspaper, a big Yellow Pages ad or a display ad in the Pennysaver or similar free grocery store magazine. This advertisment by the residential mortgage broker probably reaches thousands of potential borrowers every month. Now if this residential mortgage broker is giving you all of his commercial loan referrals, this means that with a single $1 mail piece to the mortgage broker, you are reaching thousands of potential borrowers. If the residential mortgage broker is spending $400 per month, then your $1 mail piece is getting leveraged by a whopping 400 times. This is marketing leverage.
Do you need to place a commercial real estate loan right now? You can submit your commercial real estate loan to 750 different commercial mortgage lenders in just four minutes using the C-Loans Commercial Mortgage Lender Portal. | |
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| September 23, 2008
Excerpt from: Commercial Real Estate Loan Tips | | Auto Repair is Hot and Retail is Not | I recently spoke on commercial real estate loan matters at the National Association of Mortgage Brokers Annual Conference in New Orleans. While at the conference, I wandered through the exhibit room and brain-stormed with the exhibitors. Not surpisingly, commercial real estate lending was way down. Commercial lenders had scaled back their appetite for retail properties. But one asset class was hot - of all things, auto repair! Apparently some of the larger commercial lenders had noticed that the best performing class of commercial properties in their portfolios was in fact auto repair. It makes sense. Americans are not buying new cars right now but are rather just repairing their existing cars. One lender with whom I spoke had actually raised its loan-to-value ratios on auto repair loans from 65% to 75%, in order to encourage more commercial loan applications on such properties.
Do you need a commercial loan? You can apply to 750 commercial lenders in just four minutes using C-Loans.com. And C-Loans is free! | |
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| September 15, 2008
Excerpt from: Commercial Real Estate Loan Tips | | The Commercial Loans They Made Were Darned Good | Lehman Brothers got screwed. They filed for bankruptcy today because foolish regulators forced Lehman Brothers to mark the commercial real estate loans in their portfolio to market. Because the market for subprime commercial loans has completely frozen up, Lehman Brothers became insolvent. It's a darned shame. For the last seven years my commercial mortgage company, Blackburne & Brown Mortgage Company, Inc., has been competing against Lehman Brothers for small, subprime commercial loans. Since their rates were better than ours, Lehman Brothers was able to cream the market for the best quality subprime commercial loans. I never knew them to make a foolish loan. When the dust all settles and Lehman's assets are scattered to the four winds, history will show that this was a darned fine portfolio. They were earning around 9.5% on a portfolio of commercial first mortgage loans with an average loan-to-value ratio of 68% to borrowers with fairly decent credit. An investor could buy that entire portfolio at par and beat the pants off of most competing investments. These were not high-LTV loans to flakey borrowers on grossly over-valued homes. These are darned good assets. If anyone wants to sell a portfolio of Lehman's subprime commercial loans, Blackburne & Brown is definitely a buyer. Please contact me, George Blackburne, immediately.
Need a commercial real estate loan? You can apply to hundreds of banks and subprime commercial real estate lenders in just four minutes using C-Loans.com. And C-Loans is free! | |
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| August 12, 2008
Excerpt from: Commercial Real Estate Loan Tips | | Below is the Advice I Gave a Struggling Commercial Mortgage Broker | Here’s my advice: Stick to small commercial permanent loans. Do not work on anything larger than $3 million unless you have a special relationship with the borrower (former client). Small commercial loans are the ones that close and feed your family. New commercial mortgage brokers almost never close large loans. Why would a filthy rich investor with perfect credit and millions of dollars in equity work with a mortgage broker who is obviously new to the business? He'll spot the new broker's inexperience in the first few minutes of conversation. So the large deals that new mortgage brokers get are almost always hopeless. And even if the perfect, large deal ever did fall in their laps (one chance in a million), most new brokers don't yet have a personal relationship with the top loan officers at the huge banks. These top dogs are very, very, VERY cliquish. They don't fight hard in Loan Committee for newbies. So don't waste precious time trying to place large loans ... unless you have 18 small commercial permanent loans in process that will feed your family. Give me a $300,000 lead over a $30 million lead any day! Small deals close. Large deals waste your time. Do NOT waste precious time working on construction loans. The world has more enough homes and commercial buildings right now. Ninety-nine percent of the time, when a developer approaches a mortgage broker for help placing a construction loan, the developer does not have enough cash into the deal to qualify for a construction loan. He can't cover 20% of the construction costs. Do not work on construction loans! The deals you want are the permanent loans and the bridge loans. - Never waste a minute on international loans. They never close. Ever. Ever!
- Read my blog daily for tips. http://www.blog.c-loans.com Go back and read all 100 of the old articles.
- Build a databank of referral sources (commercial brokers, residential mortgage brokers, bankers, property managers, estate planners, etc.) and advertise to them by snail mail or email regularly. Pepper your newsletters with TONS and TONS and even more TONS of jokes and fun stuff. Condition your referral sources to look forward to your emails.
- If you’re no good at writing newsletters, subscribe to my email newsletter service. http://www.c-loans.com/newsletterservice.html
Learn how to create your loan packages using PDF’s. This saves on shipping and allows you to submit a deal to multiple lenders in seconds. - Start buying leads from C-Loans. They’re only around $2 apiece (plus 37.5 bps. on closing). http://www.c-loans.com/leads.html
Get a signed fee agreement on every deal, but don’t ask the borrower to sign it until you’ve run him around for weeks fetching documents. Wait until the borrower is desperate and hungry before presenting your agreement. - Don’t waste time working on deals with a low probability of closing. Instead, use every free minute to meet new bankers and commercial brokers (realtors). Add them to your email list.
- Realize that your closing rate will never exceed 30%. This means you need to have 15 to 18 loans in process at all times. Do you have 18 loans in process right now? If not, get busy.
- Only work with strong loan officers. Loan Committee is a process where the decision-maker almost always says, "No", initially. Then the loan officer has to use logic, fundamentals, oratory skills and strength of will to push the deal through to approval. If the loan officer at the bank who has your deal sounds and acts like a wimp, ask for the package back and then submit the same deal to a stronger loan officer at the same bank.
- Grasp the concept that commercial lenders make loans for their friends. Become buddies with the top loan officers at various banks. They will then fight for your deal in Loan Committee. This may be my most important tip.
- Learn the business! If you truly know how to underwrite commercial real estate loans, you won't waste countless hours working on hopeless deals. Hundreds of graduates of my commercial mortgage training course now earn more money than the average physician. You'll learn an entire profession for a lousy $499. Hellooo? Is this a trick question?*
Need a lender for your commercial deal? You can submit your commercial real estate loan to to 750 commercial lenders in just four minutes using C-Loans.com. And C-Loans.com is free. Click here.
Your comments are invited.
* I always loved that line. It comes come from the original Ghostbusters movie, where a demon possesses the body of a young (23 years ago) and beautiful Sigourney Weaver. Sigourney is laying on the bed seductively, and she asks the whacky Bill Murray, "Do you want this body?" Bill famously replies, "Is this a trick question?" :-) | |
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