What is a Commercial Mortgage Broker?

A commercial mortgage broker has expertise in the many financing options for real estate loans for business purposes. You can include business ventures like purchasing a small office building, a large medical facility, buying a multi-family home to rent it out, building a church, or even an arts center. Whatever the commercial property investment is at hand, brokers can help you get financing for renovations, land, or expansion.

a commercial mortgage broker


How a Commercial Mortgage Broker is Different From Bankers

Unlike mortgage bankers, a commercial mortgage broker can foster relationships with a multitude of lenders and investors, and those relationships are not exclusive. So, a commercial mortgage broker possesses more flexibility in finding options that traditional banks cannot provide. Additionally, mortgage brokers can take you through the entire loan process, including doing things like making sure that you have everything you need to pre-qualify. Sometimes, mortgage brokers even remain available after your loan closes to assist you with anything else that you need concerning your mortgage.

Commercial mortgage brokers may only work in a specific region – for the experts at Abbey Mortgage & Investments, that region is Colorado. While national and international firms exist, these companies generally work ‘higher-ticket’ deals and thus receive more substantial commissions.

What To Expect With A Colorado Commercial Mortgage Broker

Generally speaking, a mortgage broker takes you through the entire loan process from pre-qualification to closing. However, before he or she starts shopping for your loan to find the right fit and the best deal, the broker will also review your paperwork and talk to you about your specific situations to figure out what the best option is for you. You’ll also discuss things like your expectations for loan payments, closing costs, prepayment fees, and other loan-related information.

If you are purchasing land or an existing building, brokers often bring in third parties to verify the condition of the property. These practices speed up the qualification process but also helps you by alerting you to any issues regarding the property that you may not have known.

Real Estate Financing Options With Your Broker

Next, a commercial mortgage broker should seek out all of your real estate financing options. Brokers should have relationships with more than one bank, and they often have expertise in other areas of business financing. In some cases, this could be a Small Business Administration Certified Development Company (SBA CDC) loan or an alternative funding solution through a non-traditional lender like an investment company or an insurance firm. Either way, your commercial mortgage broker should not just settle for one deal or the first deal but instead bring you a list of options from which to choose.

Consequently, the broker should then present the best commercial mortgage loan options for you to consider. You benefit as the loan beneficiary because you have the power in the decision-making process. But if you’re confused or have questions, don’t worry – he or she can answer any questions that you might have and review the details of the loan. The broker stays with you through the entire closing process, negotiating on your behalf.

Determining if a Commercial Mortgage Broker is Right For You

Brokers can be expensive, like all commission-based professions, they are in the business of making a profit as we all are, they are business people, after all. However, commercial loan brokers can save you time, money, and frustration, especially if you can relate to any of these cases:

  • You don’t have any time to shop around
  • You are not familiar with the commercial loan process, and you don’t know all of the alternatives
  • You have unique issues or an individual situation that makes getting a loan more difficult
  • You have already tried to secure a commercial mortgage on your own, but you were not satisfied with the results
  • You want to see all of the possible financing options available, but you don’t have the time, rationale or the expertise to do the research yourself

Minimize Risk by Understanding Real Estate Investing

Dealing with a mortgage broker can be intimidating, but understanding your risks will help lower the risk level. Commercial real estate investing is often appealing to investors because of the possibility of a high reward, but that doesn’t go without substantial risk. While commercial real estate investing is risky, there are many steps you can take to mitigate those risks and produce an income. Let’s discuss a few general tips to put you on good footing.

Do Your Due Diligence

When it comes to minimizing your risk as a commercial real estate investor, one of the most important things you can do is take a hands-on approach. You will be analyzing the property, title, tenant relationships, and many other aspects relating to the property as well as your new potential lender. You need to look for any red flags before as you are moving forward with your commercial investment. During this period, you need to uncover any potential issues that could turn your hopeful income-producing investing into a nightmare.

Understand the Market

Before you partner up with a lender or even attempt to invest, it’s important to understand your market at a high level. You should ask yourself questions such as:

  • Is the lender reputable?
  • What are the current interest rate trends?
  • What are the unemployment rates?
  • What are the average rent prices?
  • Are there good vacancy rates?
  • Is there a slow season?
  • Does the city a property sits in have rent control?

Can you confidently answer these questions? By doing your research and making sure you have a thorough understanding of the market and trends, you can help ensure you are making a wise investment decision.

Don’t Overpay

This may sound obvious, but overpaying for commercial real estate is not uncommon. It’s so important to do your research and compare your property to nearby listings. You should also take into account how much your property is worth per square foot to analyze cash flow. When you overpay and miscalculate cash flow, what you had hoped would turn into a profitable real estate investment turns into a liability — leading to failure. So whatever you do, don’t overpay.

Get A Second Opinion

Though getting a commercial real estate loan maybe a little frightening, don’t think you have to go through the process on your own. When it comes to commercial real estate investing, it’s important to work with a team of professionals who can provide you expert knowledge and guidance when it comes to your investment. Abbey Mortgage and Investments would be happy to review your deal to make sure it makes sense. We are not brokers, we are a direct private lender. In other words, your broker may submit your commercial loan to us for funding. Robert Kearney, the owner of Abbey Mortgage, has been loaning money to commercial property owners and investors for over 30 years. He is embedded in local planning commissions and understands the Colorado Market. When you are looking to finance your business, he is a great resource that is available to you, just give him a call!

We hope these tips were helpful and provided you guidance on your next commercial real estate venture. If you have any questions regarding your commercial real estate investment or would like to look at getting a Colorado commercial loan, contact us today! We look forward to helping you with your investment.

Stay Tuned For More Information About Commercial Mortgage Brokers, Banks and Private Lenders

If you’re looking to get the right Colorado commercial loan, securing a large number of funds for business development purposes might seem a little daunting. However, your friends at Abbey Mortgage & Investments, your commercial hard money lender, can help you secure a business loan on a more timely basis than banks or other national or international lender options. Contact us today to learn more about asset-based lending, bridge loans, and more!

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