Right behind my right ear is this goiter that swells up, pulsates, and glows a florescent internet green whenever I run across a commercial loan that smells like a big commission. I call that goiter my "greed gland", and boy does that sucker pulsate (thump-thump, thump-thump) whenever I stumble across a hot commercial mortgage lead.
It's sort of like that old joke, "What do a hurricane, a tornado, and a redneck divorce all have in common? Someone's fixin to lose a house trailer." Well, when certain stars align, some lucky commercial mortgage broker is fixin' to earn a big commission. But here's the $20,000 question, "What do the stars look like when a commercial loan is almost certain to close?"
It's easy to spot the hopeless deals:
- Commercial construction loans
- International commercial loans
- Letter of credit commercial loans
- Most large commercial loans
- Loans on casinos and mines
- Land loans
Here are some of the deals that make my greed gland glow:
- Loans with balloon payments.
- Deals where the bank has offered a discounted pay-off.
- Since the start of the Great Recession, low-LTV commercial mortgage loans to business owners to help cover their losses.
- When an heir inherits a free-and-clear commercial property, he usually has it mortgaged to the hilt within five nano-seconds.
I used to teach my students that, "Commercial property owners who pay off their mortgages almost never mortgage their commercial properties again. Corrolary: When an heir inherits a free-and-clear commercial property, he usually mortgages it to the hilt within five nano-seconds." Yeah-yeah, I said the same thing in the list above, but this is so important that it was worth mentioning again.
Since the Great Recession, we have refinanced a number the commercial properties where the business owners had previously paid off their mortgages. Clearly the rule is not perfect. The Great Recession was just so bad that they just plain needed the money.
The wise commercial mortgage broker will therefore not waste his time working leads from the first list, but rather he will relentlessly pursue the leads from the second list. And if he has worked all of the hot leads, he will devote his time to marketing for more referral sources.
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