I recently watched a TV commercial for a local bank. At first I thought the ad was for a travel website, because they showed families enjoying their vacation. Then I realized they were selling their ATM access. Nothing was said about loan programs or commercial lending. The fact is, they don’t want borrowers to contact them because the answer is most likely going to be NO.
When borrowers and brokers send us a request for commercial real estate funding, we always respond with questions. Every loan request that comes to us is in raw form and needs to be prepared for lender review. Many times these loans are prepared by a third party and when asking for additional information the client points to an extensive business plan, which may have been written for a different audience.
Commercial Loan Packaging
Commercial Lending Report
Even with uncertain economic indicators and slow hiring, rental housing demands are increasing. Conditions remain favorable for multifamily markets across the nation. The demographic trends indicate high levels of immigration, the surge in echo boomers forming their own households, a further shift away from homeownership, and the growing diversity in household composition support continued demand for rental housing.
You are probably wondering what the title of this article has to do with the business of Private Lending for Commercial Real Estate. I was listening to the Tom Petty song and thought about the important attributes of commercial real estate brokers. In our business, success comes from being patient and understanding the timing of the process.
If you are looking for a business loan, commercial real estate loan, or looking to raise equity for a commercial project, you are likely going to work with a commercial loan broker to raise the capital. This article addresses the quandary known as the broker chain. If a broker chain is formed to find a source for funding a project, the process is likely to be impeded by weak links in the chain.
What is a Broker Chain
Commercial lending, for the most part is based on the value and performance of the commercial assets used as collateral. Because of the focus on the asset performance, many borrowers expect commercial loans to be non-recourse.
Most borrowers are optimistic investors leaving much to chance. Most private lenders are bullish and use mathematical models to provide risk assessment. Loan originators are jammed up in the middle.