Commercial Loans Blog

Commercial Mortgage Brokers Do NOT Need a Fancy Office

Posted by George Blackburne on Wed, Sep 19, 2012

The wise commercial mortgage broker will run his mortgage business out of his house.

Your borrowers certainly won’t mind.  In fact, they will probably think you’re pretty smart.  After all, just about every business owner in America was forced to make painful cuts to his staff and his overhead during the Great Recession.

You do NOT need a fancy office to impress your commercial mortgage borrowers.

If your commercial mortgage client needs to drop off some loan documents, just have him bring the documents by your house.  Don’t be embarrassed about it.

Now I don’t think I would invite some strange, deadbeat, home loan borrower to my house; but remember –

in commercial real estate finance almost all of your clients will be wealthy and classy.

So go ahead and introduce your multi-millionaire commercial borrower to your lovely wife.  Use this home visit to bond with your client, as he notices that your home is neat, clean, and tastefully decorated.  After the visit, he’ll almost feel like he’s part of your family.

Let me share a verbal proof story with you.  Before I made the move into hard money, I worked as a plain-vanilla commercial mortgage broker for seven years.  I started off by working out of my house, and I made very good money.

But then I opened an office that cost me several thousand dollars per month extra for rent, utilities, and janitorial expenses.  Slowly my finances began to deteriorate.  I no longer had a lot of extra cash in my business checking account.  My credit card balances grew. 

Eventually I realized that I would have to give up my office in order to lower my overhead.  I cut a deal with my landlord to escape early from my lease.  (I’m proud to say that I went back and repaid him every single penny that I owed him.)

Then I retreated back to working out of my house.  Almost immediately I started making very good money again. 

However, being the silly man that I was, I once again opened an office and took on an extra $2,000 per month (probably the equivalent of $3,500 today) in unnecessary expenses.

You will shocked – shocked, I tell you – to learn that the same thing happened again.  I quickly ran out of money, so I once again retreated to working out of my house.   Then – surprise, surprise – I started making very good money again.

“George, don’t you dare tell me that you were soooo stupid that you opened another office?  No one can be that stupid.”

Yup.  And once again I eventually had to retreat back to my house, where I proceeded to once again make very good money.  Is anyone seeing a pattern here?

Two years later I entered the hard money business and built up a large, automatic, monthly loan servicing income (almost like insurance residuals).  At that point, when I was bringing in $7,000+ per month in loan servicing fees, I once again moved out of the house and into an office for the final time.

Bottom line, folks, if you want to make and keep a lot of dough in the commercial mortgage brokerage business, you will either work out of the house or just rent a desk in some realty broker’s office for, say, $300 per month.

You do NOT need a fancy office.

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Topics: Loan office