Have a Smooth Transaction
As a real estate investor, you don’t have to do it alone–it is wise not to. Instead, you should surround yourself with a team of experienced professionals who can help maximize the profitability of your business. So who do you need on your real estate investment team? That’s what we are exploring in our blog series, “Your Real Estate Investment Team.” Today we are looking at the pros who make your transactions happen without headaches: your mortgage lender and your real estate broker.
A Trustworthy Broker Has Financial Industry Experience
Your broker should be a member of the good standing of local and national financial associations.
They should also be a respected member of their community and have good relationships within the local banking community. They’ll have a vast network of lenders specializing in various products.
You will want a broker who knows which lenders have an appetite for your particular industry and credit situation. They can advise you on how aggressive they may be on rate and the pros and cons of each type of loan under consideration and will help you assess the merits of multiple term sheets to present you with the lowest cost of funds.
Integrity Is a Non-Negotiable Quality in a Mortgage Broker
Avoid commercial loan brokers who send your proprietary information to every lender they know, hoping something will work out. This is a complete waste of time, and you will be inundated by junk mail and spam afterward. And a good commercial loan broker won’t take fees from the lender and the borrower on the same deal.
Know Exactly What Your Mortgage Broker Charges
The mortgage broker you choose should select a lender based on what is right for your business, no matter the size of the broker fee. After all, they should care more about long-term relationships than a single fee. And, never let them sell you a financial product that doesn’t fit your situation. Some commercial loan brokers will work through another broker to find you the right lender. Make sure that the brokers involved and their fees are all disclosed up-front.
A Responsible Mortgage Broker Won’t Waste Your Time
Some brokers will promise one product and show up with something completely different. However, an experienced broker will be able to indicate what financing terms and rates you can expect, as well as your chances of receiving funding at the rate you desire.
They can tell you if your deal is bankable and refer you to an appropriate commercial loan officer at one of the broker’s bank partners. Your broker should help keep the process on track by reviewing your loan documentation and providing expert answers to your questions.
They should work with you and for you and present your business in the best possible light.
Choosing the Right Real Estate Broker Is Essential, Too!
Do your homework. Look at several different brokers. Look for a commercial broker specializing in the type of property you are searching for. For example, you will want an office broker if you need office space. If you plan to open a storefront, get a broker who specializes in retail properties. So, ask them to describe their recent transactions involving the type of property and locations you are interested in. Also, ask for references and follow-up.
They Need Commercial Real Estate Experience
Ask your broker how many years they have been in the business. Commercial real estate is very different from residential real estate. It takes years to acquire the in-depth knowledge an excellent commercial broker will possess. They need to analyze things like return on investment, cap rates, and net operating income.
Does The Broker Have The Proper Tools to Represent You?
Your broker should have access to the best tools and market information necessary to represent you adequately.
- They should subscribe to Costar
- They should subscribe to Loopnet
- They should be a Certified Commercial Investment Advisor (CCIM)
Avoid Brokers With Conflicts of Interest
The commercial real estate broker you choose should always work for your best interests. For example, if you are interested in a commercial property and call on it, you will receive a call back from the owner’s broker. That broker will happily sell you the space, but they represent the owner–not you. This is why you must engage your own buyer’s representation, who will look out for your interests.
Establish Guidelines for Maximum Efficiency
Establish some guidelines for your intended purchase to clarify what you need. This will make the process easier for you and your real estate broker. For example, what type of property are you searching for? For example, do you need an office building, an apartment complex, or an industrial space? What is your budget? In what location do you want to buy? How much square footage do you need? Is visibility important? By preparing a list of requirements, you can help your real estate broker find the right property for you while saving time on properties you are not interested in.
Plan To Have a Cost Segregation Study Done From the Start
When investing in real estate, whether a commercial or residential rental property, it is vital to have a cost segregation study done. Your accountant can use the study results to reduce your tax burden significantly. Find out how much you can save!
Get a no-cost, no-obligation estimate today!