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Why Brokers Should Be Closing Multifamily Property Deals in 2020

Competition is fierce and professionals in every industry are essentially required to have more robust repertoires in order to succeed in their field. For brokers, that means being able to diversify their business. Sure they may be experts on all things residential, but loan officers who can add commercial deals to their portfolios are easily more appealing to prospective clients.

If you’re a broker specializing in residential, but wish to transition into commercial lending, you may want to consider starting with commercial multifamily deals. Multifamily properties (considered commercial if it has five or more units) are similar enough to residential properties, making them the ideal shift from residential to commercial.

Keep the following 3 points in mind as you diversify your residential business with commercial multifamily deals.

 

Property Type

On a physical level, residential and multifamily properties are incredibly similar, the only difference being the number of units in the building. Whereas a duplex or triplex consists of two to three units, a commercial multifamily property features five or more units.

Although a multifamily commercial space will have more apartments, brokers will likely be familiar with the general layout and property characteristics.

Brokers who choose to work on multifamily properties can also expect a similar transaction process when closing loans. Other property types—warehouse, retail, and restaurants—are more complex when it comes to the real estate appraisal and underwriting stages. Certain commercial buildings, like automotive properties, carry additional environmental concerns that are likely new for a residential loan officer. These differences make multifamily deals a more natural starting point for brokers looking to diversify.

 

Similar Clients

If you’re thinking that you’ll have to get a new set of clients to lend on commercial properties, think again—more often than not, brokers can find commercial borrowers from their existing residential customer base. Investors who have previously worked with brokers on residential loans may want to work with the same broker if they’re looking into closing a commercial loan.

Not only does this help your client, it also helps establish you as a well-rounded loan officer. Having the ability to close on a variety of deals gives the broker the opportunity to bring in business on both the residential and commercial side. More importantly, having commercial knowledge will make borrowers feel more comfortable when bringing their business to you.

Pro-tip: Scan the REO (real estate-owned) section of closed 1003s to find current commercial property owners who might be interested to hear your new offerings. Chances are they will be interested and appreciative of the help.

 

What Competition?

Real estate is one of the more popular investments for borrowers, and it’s showing no signs of stalling in 2020. Adapt to the trends and make yourself more marketable as investors continue to opt in on multifamily properties.

Now more than ever, it’s important to stand out in the industry. There are tons of brokers in business, so it’s crucial to differentiate yourself against competitors. A broker who can close residential deals is good, but a broker that can close both residential and commercial loans is great.

Next Steps

Ready to begin closing multifamily deals with Silver Hill Funding, LLC on your side? Reach out to one of our Regional Managers today to get started.

Brokers who partner with Silver Hill are provided with resources to become a commercial mortgage pro in no time. Our broker portal features a host of marketing resources to better build your brand. Think unbranded flyers, postcards, and communication scripts.

With Silver Hill, you will have the opportunity to establish yourself as one of the most in-demand brokers in the small-balance commercial loan industry.