Entering into a commercial real estate venture can be an intimidating decision. Whether you are looking to purchase your first property or are simply trying to scale up from what you already have, going at it alone might seem like a noble challenge, but with so much money on the line, it is often wise to seek the help of a broker in commercial lending.
The market of funding sources for property investors has been expanding and it will continue to do so as new and creative ways of funding commercial mortgages keep emerging for small business owners. As an individual, it can be a huge work load to try to stay on top of all of these various options, while still maintaining a small business. This is where a commercial broker could be of tremendous help to a potential borrower. This is not to say that a borrower should not spend a great deal of time learning what they can, it is a lot of money, but brokers know the commercial lending landscape better than anyone, especially in local markets like the one emerging in Texas.
So what exactly does a commercial broker do and what can a lender expect out of one? Essentially, a good commercial broker will have lots of experience in a large variety commercial lending options. This can be any property from a strip mall, to an office building to a multifamily housing unit, although each individual broker will most likely have an area of specialty.
A huge benefit of working with a commercial broker is that they have connections with a variety of lenders. This gives them a great deal of flexibility when searching for the best possible loan for a borrower. While some brokers only specialize in certain regions, this can actually be a benefit, as they will be able to guide a potential borrower to very specific lenders for very specific properties.
Typically, a commercial broker will take a borrower through the entire process of securing commercial lending. Sometimes this might mean that they even assist a borrower after the loan has been approved, if there are additional requirements. A broker will review a borrower’s financial needs and qualifications and then being “shopping” for a potential lender. Brokers will also help with finding appraisers for the property. However, one of the greatest aspects of working with a broker is that when all of the appraising and paperwork is done, they will present the borrower with a list of options to choose from. Compiling such a list as a small business owner going at it on their own would take an extensive amount of time and would most likely be incomplete, as a borrower is not going to have the same type of relationship with lenders as the broker. The borrower then simply chooses which option is best and the process moves forward.
How are commercial brokers paid on commercial lending in Texas?
Typically, brokers are paid from a percentage of the final loan amount. This can be anywhere from 1% to 5%, traditionally. While some brokers have an upfront fee, many do not, which is very beneficial for borrowers. Brokers also usually depend on referrals, rather than active recruitment, so it is in their best interest to do everything that they can to help you secure the best commercial lending option possible for a borrower.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.