From the Editor
By Neil Pierson
Stay flexible to thrive,
not just survive, in the new year
We’ve survived a tumultuous 2017 in terms of political, social and economic issues. As 2018 gets underway,
hopefully you’re looking to thrive — rather than just survive — in the world of commercial real estate financing.
Certainly, many pundits are expecting commercial real estate to hit some sort of wall in the next year or so if
stricter lending parameters, rising interest rates and slow growth in net operating income continue to collide.
Commercial mortgage brokers should continue to analyze and understand macroeconomic trends to help their
clients find the most profitable investment opportunities.
Our January magazine explores a wide range of topics to aid brokers before, during and after a
On Page 60, Rodrigo Lopez discusses the macro-level forces influencing asset classes, such
as multifamily, office and industrial. Lopez, chairman of the Mortgage Bankers Association,
argues that possible changes to banking and tax laws, as well as possible reform of the
government-sponsored enterprises Fannie Mae and Freddie Mac, could put the commercial real
estate industry in a better position to serve cities across the U. S.
On Page 46, Clark Briner of Revere Capital compares two common loan scenarios that commercial lenders receive. A deal that looks good on paper, Briner says, may not get funded because
the borrower and broker overlooked some key details, such as a property’s long-term cash flow.
That can make all the difference when a nonbank lender is comparing dozens of applications.
Similar to the above scenario, you may have experienced disappointment if a traditional bank
has rejected your client’s loan request. That’s when a small-balance, nonconforming lender can
save the day. On Page 78, Emily Landgraf of APEX Mortgage Corp. says there is a small but eager
group of these lenders, and they often cater to nonbankable borrowers who want to avoid the
drawbacks of a hard money loan.
Hard money is January’s focus topic. On Page 63, Alex Cohen of Liberty SBF discusses a popular hard-money
scenario — bridge-to-agency financing. Bridge loans provide a speedy financing option for multifamily investors who are waiting for low-interest, high-leverage financing from government-agency sources like Fannie Mae,
Freddie Mac or the Federal Housing Administration.
If they haven’t already, brokers may expand their business model by working with fix-and-flip investors on
single-family properties. On Page 58, Tyler Stone of Capstone Financial says commercial brokers should
understand that a fix-and-flip loan is technically commercial financing because it involves a nonowner-occupied
property. In addition, because of their increasingly tech-savvy job markets, there are a number of under-the-radar
cities that are fertile investment ground for these deals, which are typically funded by hard money loans.
This month’s lead article discusses the importance of building relationships with private lenders. On Page 31,
Jeffrey Tesch of RCN Capital says brokers should know the basics of a lender’s business model and then tailor a
client’s loan proposal to fit specific criteria. Knowing your value and charging an appropriate fee also is part of
creating successful, long-term business partnerships, he says.
Noah Grayson of South End Capital Corp. also offers advice to brokers who need to boost the bottom line.
On Page 51, Grayson makes the case for charging smaller fees, spending more on advertising and giving
borrowers more control over deals, particularly when a commercial mortgage broker has relatively few clients.
As you turn the page on 2017, stay knowledgeable and nimble. And consider sharing your expertise with the
readers of Scotsman Guide by writing an article. Contact me at the phone number or e-mail address below,
and I’ll be happy to help you get started.
Neil Pierson is editor of Scotsman Guide Commercial Edition.
Reach him at (800) 297-6061 or firstname.lastname@example.org.