Time Management
Most commercial mortgage brokers devote less than 15% of their time to marketing for commercial loans. They devote the vast bulk of their hours to trying to place a $4 million loan on a money-losing bowling alley in some hollowed-out city or a $20 million construction loan on a new resort in Mexico.
So how much time should a commercial mortgage broker devote to marketing? Before I give you the surprising answer, it is critical that you understand this important fact: The typical commercial real estate loan officer working for a life company, a bank, or a hard money lender will take at least 40 to 50 phone inquiries and will underwrite 10 to 15 loan packages for every loan he approves. Commercial real estate lending therefore is an immense sifting and sorting process.
The value you add as a commercial mortgage broker is to help your lenders sift and sort through dozens and dozens of loan requests to find that one deal that makes sense. Your job is NOT to grab ahold of the first loan request you find - say, a $4 million land loan in the desert of California - and then spend 20 precious working hours trying to place a deal that is not do-able. Your job is to say to your borrower or realtor, "I'm sorry, Bob, but in today's market I'm not sure anyone will finance this project."
Therefore, it is my opinion that the typical commercial mortgage broker should devote SIXTY PERCENT (60%) of his time to marketing for commercial loans!
When a lead call comes in, you should quickly qualify it over the phone. If this is a purchase money deal, how much cash is the borrower putting down? If this is a refinance, and he needs an 80% LTV loan, or higher, to pay off his existing lender, kill the deal. What is the borrower's net worth compared to the loan size? It should be at least equal. Got an auto mechanic with a $200,000 net worth trying to buy a $3 million apartment building? Kill the deal.
"But George, what if I don't have a single deal in processing?" Then spend every possible minute calling, writing, or visiting nearby bankers and commercial real estate brokers. Write newsletters and get them out. Go to mixers. Schmooze. Do not - do not!!! - waste your precious time trying to place pipedream deals. It is far better to turn away one deal in forty that might have been do-able than to waste precious marketing time trying to pull off a miracle on a goofy loan. Your policy should be, "If a deal is not obviously a winner, I'm turning it down and working on my marketing."