CONSUMER PURCHASING OF INCOME-producing properties has grown since the stock market's dramatic fall at the start of this decade. Many investors since then have moved funds from technology stocks into apartment buildings. Add to that the big drop in home refinancing activity over the past few quarters, and the case for brokers to pursue commercial property loans becomes compelling.
Darryl Haysbert recently realized--after 14 years of residential originating--that many of his past clients either owned or were buying commercial properties. Today his business is equally split between residential and commercial lending, says Haysbert, a commercial mortgage specialist at Citizens Financial Network, Atlanta. "It grew naturally," is how he explains his new lending niche. Haysbert adds that he doesn't want to be "fighting for business" with other residential mortgage brokers as interest rates rise.
Wholesale commercial property lenders forecast increased loan volume this year. "Brokers looking to supplement their revenue streams" will push the 2005 growth of Silver Hill Financial LLC, Coral Gables, Florida, predicts Mike Boggiano, the company's senior vice president and national sales manager. Silver Hill makes the transition to commercial loans easier for residential brokers by having income property processes mirror residential lending. "Underwriting is residential-style," explains Boggiano, so that "the forms and terms are familiar" to originators who are new to commercial property lending. Brokers use the Uniform Residential Loan Application form to submit commercial property deals to Silver Hill.
Currently Silver Hill has 1,500 registered mortgage brokers, and most are actively submitting commercial property applications, Boggiano says. He notes that half of all brokers who try commercial property lending with Silver Hill later send repeat business. Silver Hill focuses on lending in the $100,000-to-$1-million range, and offers both fixed-rate and adjustable-rate loans. Lending on multifamily buildings is most popular, and the processing can be done either by the local broker or Silver Hill. Most brokers prefer being involved with a transaction, says Boggiano, both in order to strengthen their relationship with the borrower and to learn about commercial property lending.
Brokers can locate commercial loan prospects by going over previous residential applications to find customers who list income-producing real estate as assets. Haysbert notes...