How to become a commercial loan broker

Are you interested in learning how to become a commercial loan broker? There are a few areas of the business that you must master in order to be successful as a commercial loan broker.

1. You must be very good at pre-screening offers, so you don’t waste time chasing deals that won’t close.
2. You need a strong network of lenders.
3. You need multiple reliable sources of leads.

Becoming a commercial mortgage broker isn’t rocket science, but it will take time to get established and get to the point where you really know what you’re doing. Beware of sources that tell you how easy it “really is.” These sources are typically lenders with rates 200 to 300 basis points higher than most and are looking for newcomers to pawn these rates to their borrowers.

Shortlist offers

A lot of time and effort goes into all deals. Knowing how to analyze a loan application is very important. You need to be able to sit down with a package and in 20 minutes figure out if you’re going to pass it or work on it. It’s very easy to waste hundreds of hours on a loan that has no real chance of closing.

There are many reasons why loans are not financeable, but it is usually a combination of loan to value, credit and income. The most difficult to calculate is the amount of net income that can be used. Tax returns are complicated and there are many tax havens and areas where expenses can be reported twice. So you have to be very good at reviewing a deal and deciding if it has “legs.”

Strong network of lenders

It is also very important to have a strong network of lenders. Number one, you have to know their programs well. You need to know what they really like, beyond the matrix. You also need strong relationships with the people you work with. You need quick and thorough decisions. Having your files at the top of your stack is important.

Marketing

You must compete in many transactions to find deals that are workable and where you can have some control. There are many marketing methods and most of them will work in this business, due to the high payouts.

The traditional method of developing relationships with local investors, commercial real estate brokers, CPAs, attorneys, bank representatives, etc. it is still a very good method. This is still perhaps the best route to take, although it takes a lot of time and effort to build a name in your market. Newer methods include mailings, email campaigns, newspaper ads, etc. Regardless of which route you feel most secure with, you need some kind of program that will make your phone ring and keep it ringing. Be patient and survive the “green” period in your quest to become a commercial loan broker.