Today I am going to remind you of a marketing principle that is applicable to many fields of business, not just to commercial real estate finance (CREF). If you are looking for leads, advertise to the guys who are advertising.
In prior training articles about marketing for commercial loans, I have made the following points:
- Advertising directly to the public for commercial real estate loans does not work. It's cheap to refinance your home, so many borrowers do it every few years. In stark contrast, obtaining a new commercial real estate loan is very, very expensive. There is the cost of the appraisal, the cost of the toxic report, the loan points, and the legal fees. Commercial real estate investors therefore refinance their buildings as seldom as possible. The net result is that the chances of your advertising postcard or snail mail newsletter arriving at the exact moment when a commercial mortgage borrower is looking for a new commercial is less than one in a one hundred thousand (1/100,000). Be smart. Read this last paragraph again.
- The smart commercial loan marketer therefore advertises to those guys and ladies who, because of their job, are in a position to send you referrals of their turndowns. Examples includes commercial bankers, commercial real estate brokers, property management companies, other commercial real estate lenders like conduits, credit unions, and hard money lenders; attorneys, accountants, estate planners (life insurance salesmen), residential real estate agents, etc.
- But not every referral source is the same. Some are better than others. If your advertising costs money (as opposed to email newsletters), focus your advertising dollars on those guys who are seeing a lot of commercial loan requests. Makes sense, huh? As a general rule, I would say that (#1) commercial bankers and (#2) other commercial real estate lenders probably see the most commercial loan requests on a weekly basis.
Now we are getting to the point of today's training session. The more commercial loans that a referral source has crossing his desk, the more turndowns he can refer your way. At any given moment, who is seeing the most commercial loan requests? The company with the most commercial loan turndowns to refer you will usually be the company paying the most for commercial loan advertising at the moment. Therefore if you see a bank or a commercial mortgage company advertising for commercial loans, be sure to contact them and beg them for their turndowns.
In the old days such commercial loan advertising would appear as a display advertisement in the newspaper or in some glossy real estate magazine, like the National Real Estate Investor. Modernly, you will see the most commercial loan advertising on Google. If you do a search for "commercial real estate loans" on Google, you will see four Sponsored Ads at the top of the results page, lead off by an ad from LendingTree. These are the guys you want to chase for their commercial mortgage turndowns. There are also commercial real estate e-zines. If you see an advertisement for commercial loans in one of them, be sure to hit them up for their commercial mortgage turndowns.
But how do you do it? How do you advertise to some strange loan officer at some strange commercial lender? (1) Call the lender, introduce yourself and your commercial mortgage brokerage company; and (2) Follow up with a snail mail letter, including two business cards, thanking him for his time and asking for his commercial loan turndowns; and (3) Every week send him a funny joke, an entertaining picture or cartoon, an interesting business article, or a cool random story, along with a hand-written note asking for his commercial loan turndowns, as well as three business cards every time. Don't expect him to keep your business cards around for more than a couple of days. The hope here is that he will hand your card out to declined commercial loan applicants.
Bottom line: Advertise to the guys who are advertising.
Qualified commercial mortgage brokers can now buy commercial mortgage leads for just $1 to $9 apiece upfront, plus a 37.5 basis points if the deal closes.
C-Loans, Inc. once paid Alan Dunn a referral fee of $21,250 for a $17 million commercial loan application that came from his site to C-Loans while Alan was asleep! All he did was create a "Commercial Loans" link and point it to C-Loans.com. That's it. There was no fancy computer code to write or special partnership numbers to imbed. C-Loans.com is programmed to automatically capture the URL of the last site visited by the borrower before coming to C-Loans. That URL is printed at the bottom of every loan application. If the deal closes, we look up who owns that referring site and give them the good news.
Keep looking for the contact information of a commercial banker making commercial real estate loans. You can trade that information for a database of over 2,000 commercial real estate lenders.
For just $549 you can buy our famous 9-hour video course, How to Broker Commercial Loans. I say "famous" because a sizeable percentage of all practicing commercial mortgage brokers learned the business from this course. We also now throw in our 5-hour audio course, Intermediate Commercial Mortgage Finance. Finally you will understand all of the strange terminology and financial ratios. Your confidence will soar.
Is your client's company losing money? Does your commercial mortgage borrower have less-than-stellar credit? Is your borrower a foreign national? Do you need a non-recourse loan? Do you need a commercial loan with no prepayment penalty? Is your client's commercial property partially vacant? Do all of your commercial leases run out in the next 18 months? Do you need a lender who will allow a negative cash flow? Do you need a lender who will also look at the borrower's global income - income from salaries, other investments, etc.? Do you need a lender who will allow the seller to carry back a second mortgage? Does your client have a balloon payment coming due on his commercial property? Has your bank offered him a discounted pay-off?
Do you have an excellent commercial loan request that deserves to be financed by a life company, conduit, or commercial bank?
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