Explore niche offerings
What niches or specialties should a commercial mortgage broker consider? There are many possibilities,
including some outside real estate financing, that might
complement a broker’s skill set. You should definitely
consider your own background and current network
of contacts. A broker may have a lot of relationships
from a previous business career with heavy-equipment
vendors, for example, so that broker may decide to
develop expertise in equipment financing. With your
own background and network in mind — and to help
get your creative juices flowing — here are a few ideas
that may provide outstanding opportunities in today’s
commercial loan market.
Specializing in financing for apartments valued at
$1 million or more gives you the opportunity to outprice local banks and even get par or rebate pricing.
Some limitations exist with this niche, however, as it
may be a difficult specialty to pursue in less-populated
markets or rural areas. Larger lenders heavily favor
metro areas, and it may be hard to get deals done
outside those areas.
Business-acquisition financing is a niche that not
many brokers specialize in. Yet, there are many lenders
you can partner with who routinely do these deals.
Borrowers have difficulty finding solutions for these
needs because maybe one out of 100 banks will actually help them. There are referral sources for these types
of transactions and most are relatively easy to solicit.
Owner-occupied, or owner-user, commercial real estate
is a financing niche responsible for many transactions
around the country — in population centers large and
small. Brokers can get par or rebate pricing. This niche
tends to be more recession-resistant than others. That’s
because a large portion of these deals are financed with
an SBA loan guarantee, so financing sources continue to
make loans even in down economic times.
Equipment financing is a niche in which deals can
close very quickly, and many equipment financiers
pay healthy rebates to mortgage brokers. These transactions involve relatively few regulations and can be
closed all over the country, wherever a creditworthy
borrower can be found.
Merchant cash advances and other alternative, unsecured business loans also can close quickly and,
just like equipment financing, the rebate pricing can
be good. The potential negatives to this industry can
include very high interest rates and short repayment
schedules for borrowers. Some terms may cross the
line of predatory lending. Another drawback of late is
an abundance of competition in this space.
n n n
To niche or not to niche? Many commercial mortgage
brokers have a hard time narrowing their focus because they think it will limit their opportunities. But
experience shows just the opposite to be true. Have
the courage to find a niche and move your business to
the next level. n
Joe Mardesich is a senior vice president at
Harvest Small Business Finance LLC, a nation-
wide direct commercial lender for SBA and
conventional commercial loans. Mardesich
previously served as a vice president and commercial loan
officer for Bank of the West and First Utah Bank, and as CEO
of Nationwide Commercial Funding. He offers a free and
informal broker roundtable discussion to train and provide
resources for anyone interested in taking their commercial
loan-brokerage business to the next level. Reach Mardesich
at (801) 822-6301 or firstname.lastname@example.org.
<< Niches continued from Page 58
“Many commercial mortgage brokers
have a hard time narrowing their
focus because they think it will limit