Unique property types
Niche lending is not limited to products, however. It also includes numerous property types that
conventional lenders may not finance for any number
of reasons. Properties such as gas stations, car washes
and auto-repair shops, for example, may pose environmental issues that can deter conventional lenders
from financing them.
The U.S. Small Business Administration will only
finance certain niche property types if they are owner-occupied transactions, so there is a void to be filled by
lenders willing to finance these property types as investor deals. The niche-property space has become a
larger share of the commercial mortgage market, and
brokers can benefit from this evolution — if they are
able to line up financing terms for a sports-complex
acquisition, church construction or purchase of a
vacant mixed-use building, just to name a few examples.
Another potentially beneficial niche property type
is medical-office financing, where you can provide for
the business-purpose purchase of a condominium,
mortgage broker may develop a contact list filled with
doctors, dentists, surgeons and veterinarians who
become repeat clients or refer new clients.
Geographic location may be a determining factor
for the types of niche products or properties you
offer to clients. In areas where co-ops are prominent,
for example, offering underlying co-op financing or
bulk-share loans (in which a loan is secured by multiple
co-op units owned by the same borrower or entity) can
be construed as a niche product that is not offered by
some conventional lenders.
For areas of the country in which condos are prevalent,
you may be able to provide financing to a homeowners
association (HOA) for a property purchase, or deal with
“fractured condo” transactions in which multiple housing units have gone unsold and are available for a bulk
purchase. Maybe you work in the Bible Belt and want to
offer acquisition or construction financing of churches to
enhance your share of the market with lenders that
specialize in these properties.
n n n
Any or all of these niche programs and property types
may prove to be lucrative offerings that enhance your
position in the marketplace. As a commercial mortgage
broker, the more property types you can finance —
and the more options you have to finance them with
— the better your odds are for success.
As we quickly approach the tail end of a nearly
decade-long run of growth in the commercial real
estate market, one could argue the low-hanging fruit
has been picked. Conventional lenders are becoming
more conservative and are limiting the property types
they will finance. As interest rates and cap rates rise,
fewer deals will qualify through these sources, so the
need for niche-lending connections has never been
more critical to your future success. n
a commercial mortgage advisory company with offices in Dallas and New York. Diodato arranges financing for commercial
real estate transactions nationwide for all property types and
is an expert in U. S. Small Business Administration 504 and 7(a)
loans. Diodato has more than 26 years of experience in the
commercial and residential mortgage industries. Reach him
at (214) 561-8671 or firstname.lastname@example.org.
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