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Add Small-Balance Commercial Mortgages to Your Game Plan in 2016
Five steps to diversify your business and differentiate yourself from the pack By Michael Boggiano
JANUARY 2016 n National Mortgage Professional Magazine n
NationalMortgageProfessional.com
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Competition is intense in the current residential mortgage market. As the market evolves, brokers must continue to find new revenue streams, preferably from products your competition isn’t offering. Here’s what you can do now: Diversify and differentiate by offering small balance commercial loans. Small-balance commercial mortgages are a natural progression for brokers who offer an array of residential mortgage products. The small-balance marketplace is made up of millions of small business owners and investors looking to purchase or refinance their commercial properties. You can add new revenue streams and serve more borrowers by meeting the needs of this underserved market. The opportunity is vast in smallbalance commercial, and brokers are wise to position themselves as experts to current clients and referrals who have a need for this product. Begin with a game plan. Get educated about the market and product options, develop a stable of small commercial lenders to serve borrower needs and set goals for integrating commercial into your product lineup. Even something as simple as adding commercial mortgage lending to your e-mail signature and social media profiles can let your network know you’re ready to take on small-balance deals. Start small … literally. Multifamily properties are a perfect transition into commercial because the real estate is similar to the residential properties you work with today. Small-balance programs are more likely to feature streamlined processes. For example, look for a lending program that takes some of the work off your hands and accelerates the timeline. Some lenders even manage the appraiser, title company, environmental evaluations and insurance–freeing you to focus on client communication, document collection and relationship-building. Build upon existing referral networks. Use industry relationships with real estate agents and contractors to find potential mortgage clients. Banks and credit unions are another source for business; they frequently encounter commercial loan opportunities they are unable or unwilling to serve. Be the mortgage professional who gets those referrals by networking with loan officers at local institutions. Enhance your advisor role. Understand the financial goals and specific needs of your clients. This helps you place them in the right loan, which increases their comfort level and confidence in you. Borrowers who have not experienced the commercial loan process may find it intimidating and will appreciate your guidance. Find a niche and serve it well. For example, property cash flow can be a common roadblock for small-commercial borrowers–especially in markets where cap rates are low. Offer a product with a debt-to-income underwriting approach and you can help more borrowers and investors finance properties that otherwise would not pass traditional commercial underwriting guidelines. With reasonable expectations and the right lending program(s), you can capitalize on small commercial deals as a lucrative way to diversify your revenue stream. Prepare for a learning curve and trust that each transaction will become easier as you develop stronger relationships with your stable of lenders. Small-balance commercial loans are a smart product for residential mortgage brokers who need to diversify their income and stand out above the competition. Get in the game today! Michael Boggiano is national sales manager for Silver Hill Funding, a smallbalance commercial mortgage lender offering nationwide financing from $250,000 to $1 million. He may be reached by phone at (888) 988-8843 or e-mail mikeb@SilverHillFunding.com.
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What is Your Theme for 2016? By Andy W. Harris, CRMS o often, we’re reminded at the beginning of each year that we need to set goals and New Year resolutions, some of which we meet and others that we fail to meet. I certainly think setting goals is important year-round, but what can we do differently than others when planning for the year ahead? What if you had to put 2016 into a story? What would you write and how would it begin and end? Certainly the beginning is easy providing you are already there, but developing an overall theme might just be the difference in an exciting new journey into 2016 versus the old boring New Year resolution. Defined by Wikipedia, “Themes” can be divided into two categories: A work’s thematic concept is what readers “think the work is about” and its thematic statement being “what the work says about the subject.” What does your work say “Our life is a book that about you? What makes you different and stand out from others? What can writes itself and whose you do this year differently than last year to write a new story around your principal themes goals and vision? Creating a theme for sometimes escape us. the year and documenting a story can give you a script and path to follow We are like characters in toward meeting your year-end goals. While some stories may have several a novel who do not themes, your 2016 story should clearly single out one trend that resonates with always understand what you and your vision. The goal is to enhance your existing activities and the author wants of work behaviors. To develop a sense of them.” identity around your theme during internal and external business dealings. —Julien Green This will help others better understand you, who you are, and how and why you run your business the way you do. Making deeper connections and growing your business is about clearly understanding where you are and where you’re going. In 2016, make your story known.
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Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and past president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431, e-mail AHarris@VantageMortgageGroup.com or visit VantageMortgageGroup.com.