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How to Become a Commercial Mortgage Broker: Our Answers to 5 Top Questions

Are you a residential mortgage broker considering commercial lending? Adding commercial real estate loans to your product offering can be a great way to create more opportunities for closings each month.

Like any new project, however, getting a good start is vital to your long-term success. That said, what does it take to be a commercial mortgage broker? Where will you source leads? Who will fund your deals?

Let’s take a look at some of the keys to the puzzle:

1.    What Skills Do I Need?

 It may come as no surprise that many of the skills you are already using as a residential mortgage broker are the same needed when you make the transition into the commercial space.

You still need to have marketing and prospecting prowess. You’ll need to have a keen awareness of your audience and the insights to effectively market to them. You’ll need qualifying and negotiation skills. And, you certainly will still need a heightened sense of organization and detail.

The good news is that you won’t be starting from scratch – you can simply build on what you already know from your experience.

2.    Do I Need to be Licensed to Close Commercial Loans?

Since all residential mortgage originators need to be licensed before they can do business in their state, many assume they will need to obtain a license to close commercial loans as well. But that isn’t always the case.

The truth is it isn’t always clear if a state requires a license in order to broker commercial loans, so we encourage brokers to either consult with their attorney or search the NMLS online database to determine whether or not a license is required to broker commercial loans in those states where they do business.

3.    What Types of Properties are Common in Commercial Lending?

While residential homes can all appear quite similar within a particular neighborhood, each commercial property located along a single block can be completely different. Office buildings, restaurants, and retail centers have little in common, yet they all qualify as standard commercial properties.

You may find it easiest to focus initially on multifamily commercial properties. That’s because one of the main differences between commercial and residential multifamily properties lies in the number of units.  In many states, an apartment building with 5 or more units qualifies as commercial, while multifamily properties with 4 or fewer units are considered residential for borrowing and tax purposes.

Once you get more familiar with commercial lending, you may wish to start expanding your business to cover other common commercial real estate, like warehouse, light industrial, automotive, bar/restaurant, and self-storage properties.

4.    Where Will I Source Leads?

 As a residential mortgage broker, you already have access to a wealth of clients who may have a need for commercial loans that previously would have had to look elsewhere for funding options. This is perhaps the greatest source of leads for brokers adding commercial lending to their offerings.

However, for both residential and commercial mortgage brokers, a strong network is the key to a successful business. Here are a few quick tips for growing your network:

  • Partner with the right lender — By working with the right lenders, you’ll be able to offer attractive funding choices to your current and potential clients, which can help grow your network. You’ll know you’ve found the right team when they’re doing everything they can to support your clients’ needs.
  • Participate in industry events — As you likely do on the residential side, to expand your network for commercial loans, you’ll want to participate in industry events and business-related events in your community.
  • Utilize social media — In 2019, not having a social media presence can certainly hinder your ability to network effectively. You can expand your network online by sharing valuable information with your sphere. Your focus online should be to stand out as the “lending expert” that potential clients think of when they think of commercial loans.

5.    How Will I Qualify Commercial Scenarios?

The ability to analyze commercial scenarios and quickly determine the optimum lending solution is key for commercial originators. You won’t develop this skill overnight, but it’s one you must work toward if you want to consistently close commercial deals.

For now, try to keep the following steps in mind when a commercial mortgage scenario reaches your desk. That way, you’ll begin to develop an internal checklist that allows you to save time and increase the chances of approval for your clients.

  1. Identify the borrower’s FICO score and credit history
  2. Learn as much as you can about the commercial property in question
  3. Look beyond the property itself and learn about its location
  4. Determine the borrower/guarantor’s ownership structure
  5. Work with your client to arrive at a primary purpose or motivation for the loan request

Bonus – Who Will Fund My Deals?

 Our team at Silver Hill Funding has helped thousands of residential brokers find success in the commercial mortgage space. We have the tools and the experience needed to help jumpstart your commercial mortgage business. What’s more, we offer all of the education material and customizable collateral you need to get started with ease.

To learn more and to take the first step, be sure to sign up for our free educational course. In just 30 days, you’ll have all the tools you need to start originating commercial loans.