Whether you're buying an apartment building or renovating your office complex, getting the right financing for your business's real estate needs can save you thousands of dollars or more over the long run. Besides traditional banks that offer small business loans, business owners can now choose from several different commercial lenders, SBA lenders and alternative financing options that may offer distinct advantages for your situation – equity crowdfunding, for example. While it's always to your advantage to learn about the commercial mortgage process, you may have better results by hiring a commercial mortgage broker.
Commercial mortgage brokers very often get their business from referrals rather than online advertising, and quite a few of the brokers with websites that show up in searches are focused on real estate deals in the hundreds of millions. However, we turned to articles and professional listings to find brokers with a small business focus. In our lineup, we stuck with those that focus on securing loans from $100,000 to $100 million dollars. All of these have specific expectations and areas of focus. Edward Voccola & Company has offices across the U.S., while GCP Capital Group focuses on New York and the East Coast. The Rincon Group concentrates on multifamily properties while Pergolis Swartz, Inc. does more general real estate financing acquisition and can cover a variety of needs. A few, like Time Equities, Inc., also sell or lease real estate.
What Is a Commercial Mortgage Broker?
A commercial mortgage broker has expertise in the many financing options for real estate loans for business purposes. This can mean purchasing a small office building or a large medical facility, buying a multi-family home with the intention of renting, or even building a church or arts center. Brokers can also help you get financing for renovations, land or expansion.
Unlike mortgage bankers, brokers can foster relationships with a multitude of lenders and investors, and those relationships are not exclusive. Thus, they have more flexibility in finding options that traditional banks cannot provide. They also take you through the entire loan process, including making sure you have everything you need to pre-qualify, and sometimes remaining available after your loan closes to assist you with anything concerning your mortgage.
Commercial mortgage brokers may only work a certain region, although the ones in our lineup cover multiple states. There are also national and international firms, but these generally work higher-ticket deals and receive larger commissions.
Brokers work on commission, usually 0.5 percent to five percent of the price of the loan. While most handle the most common real estate financing situations, some specialize in specific industries or needs such as nonprofit organizations or commercial land and construction.
What Should You Expect from a Commercial Mortgage Broker?
In general, a mortgage broker takes you through the entire loan process from prequalification to closing. Before he or she starts shopping for your loan, the broker will review your paperwork and talk to you about your specific situations in order to figure out the right option for you. You'll also discuss 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. This not only helps speed the qualification process but can also alert you to issues regarding the property you may not have known about.
Next, the broker seeks out 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 alternative funding through a non-traditional lender such as investment companies or insurance firms. They do not settle with one deal, but bring you a list of options to choose from.
The broker then presents the best commercial mortgage options for you to consider. He or she answers any questions you have and review the details of the loan. The broker stays with you through the entire closing process, negotiating on your behalf.
Is a Commercial Mortgage Broker Right for You?
Brokers can be expensive and like all commission-based professions, they are looking to get as much profit as they can. After all, they're businesspeople, too. However, they can save you time, money and frustration, especially in these cases:
- You don't have time to shop different banks
- You are not familiar with the commercial loan process and don't know all the alternatives
- You want to see all the possible financing options but don't have the time or expertise to do the research yourself
- You have unique issues that make getting a loan more difficult
- You have already tried to secure a commercial mortgage on your own but weren't satisfied with the results
Commercial Mortgage Brokers: What Should You Look For?
While a commercial mortgage broker can save you time researching for a loan, it does not absolve you from doing your own homework. Finding a good broker is just as important as finding a good bank. Therefore, consider several agencies before making your final decision. Here are things the best commercial mortgage brokers have in common.
Look for brokers who have experience in the areas of finance, real estate and business. Most companies list at least the founder or top brokers on their websites. Also look for the kinds of deals they've closed:
- Does the broker specialize in your area of business and work in your region? Each type of commercial real estate has its own lending challenges. For example, if you have paying tenants you'll inherit with the property, they can, in some cases, be used as collateral.
- Are the closing amounts in the broker's ballpark? If they are too high, the company may not work small loans as readily because their brokers are used to higher commissions. If they are too low, the brokerage may not have as much experience with higher-ticket deals.
- What kind of education and continuing education do the brokers receive? Commercial real estate financing is not a stagnant industry, so these people need to keep abreast of the latest changes in laws as well as in new opportunities, both commercially or with government programs.
Area of Expertise
Most brokers don't specialize, but many have areas in which they do more deals and feel more comfortable. However, each loan is unique – what is needed to finance the refurbishment of a condominium complex varies from the requirements to build a medical facility. Ask what deals the brokerage has closed that resemble the needs for your specific business situation.
Also, be sure to ask if the broker has worked with businesses in your industry. This can be especially important for niche businesses or nonprofits, which can have different financing needs and may qualify for other programs.
In order to get the best options, your broker should have a thorough understanding of who you are and what you need. Ask about the screening process: what questions are asked, what documents you'll need. You also have a responsibility to be upfront about what you want in a loan, such as your expectations for closing costs, your ability to pay the loan early or any considerations that could hinder a loan. The more the broker knows, the better he or she can find the best financing for your business.
All brokers should assist you with the pre-qualification process, present you with research options, walk you through the proposals and liaise between you and the lender. Others services these agencies provide include inspecting the property you want to acquire, reviewing your financial documents and providing intermittent assistance after your loan has closed, such as reviewing financial documents the lender may require annually.
Commissions & Fees
As noted above, brokers make a living from commissions on the loans they make. Therefore, like any business, they seek to get the maximum commission they can for the services they render. The average runs between one and two percent of the total loan amount, although they can span anywhere between .5 percent and 5 percent. Some brokers may also have specific fees. The most common is a non-refundable processing fee. Brokers should not get paid until the loan closes. As with any big investment, it's a good idea to shop around and ask about rates and prices.
By law, mortgage brokers cannot charge hidden fees, tie their pay to your loan's interest rate or get paid for steering you to an affiliated business, such as a title company they have ties with. They cannot receive a commission by both you and the lender.
A good commercial mortgage broker can save you money in the long run, even with its commission fees. However, a bad one – or a bad deal with one – can cost you thousands. There are laws to help protect your rights, but taking the time to research brokers to make sure they are qualified and familiar with your area of business and have experience securing loans or alternate financing in cases similar to yours can help you find the best broker for you. Asking questions about the process and negotiating the broker's commission rate lets you enter the agreement with open eyes and might save you money.
Caffrey & Company Review
Caffrey & Company is a commercial mortgage broker that helps businesses find loans and other investment financing to build, buy or rent commercial real estate. Its website says it works with businesses seeking loans from $500,000 to $100 million.
This brokerage can help you find commercial real-estate financing for a multitude of property types, such as anchored and unanchored retail locations, apartments and other multi-family complexes, warehouses and self-storage, office space, restaurants, and medical facilities and assisted living centers. You can find a full list as well as some of this company's recent transactions on its website.
Caffrey & Company doesn't just turn to banks for your commercial mortgage. It can also seek out other financing sources such as insurance companies, real estate capital market sources and bond houses. A representative discusses your goals with you, completes the underwriting and presents your loan to several lenders. He or she will bring you the proposals with all the details, including closing costs, and works with you through the close of the deal.
The website is old and not always complete, but where it has full information, it's informative and helpful. For example, you can find a list of deals this commercial mortgage broker has helped facilitate, with location, loan amounts and some details of the type of service it provided. It also has comprehensive lists for preparing for a loan, organized by type of real estate. Some information on the website, such as the glossary, is incomplete, and the pages sometimes contradict each other.
This commercial mortgage broker is located in Kansas City but has brokered financing for real estate in many other states. Its deals generally run in the low millions, but it has secured transactions for the hundreds of thousands.
Although the company name implies a team of brokers, only Mike Caffrey is mentioned on the website. His name, phone and email are listed as the contact points. You can contact Mike Caffrey during business hours via phone or email, or fill out a loan request form online.
Edward Voccola & Co., LLC, is a commercial mortgage broker that can help you get financing from $200,000 to $25 million for real estate needs. It provides a variety of loans and other financing options and can help both commercial and nonprofit organizations with financing for everything from refurbishing an existing building to buying land for a new one.
The first step it takes is to make sure you pre-qualify for a loan. It works with you to thoroughly gauge your financial capabilities and risks. It also helps you define your expectations as far as fees, prepayments, timing, covenants and more, and it gathers data on the property itself in addition to conducting debt service coverage analysis and market research.
Next, it identifies the best candidates for financing. Edward Voccola & Company reviews several options for commercial real estate financing, including commercial loans, stated loans (which do not require employment verification or tax returns), bridge loans for time-sensitive transactions and hard money loans when a bank can't work quickly enough to close the deal. It also brokers mezzanine, construction and land loans. It works with special cases such as Freddie Mac small balance loans, SBA loans, NNN/Credit Tenant Leases loans and others. It can assist nonprofits and foreign nationals with financing properties as well.
Your broker presents you with options to choose, and keeps some in reserve in case the one you select falls through. It negotiates terms, coordinates the due diligence process and works with you through closing. After closing, it can continue to help by reviewing any financial reports the financial institution requires after the sale. Some lenders require annual reports for the duration of the loan relationship.
The website is well organized and explains in detail the different financing it can help you secure, along with what kind of properties qualify and any special considerations specific to the financing. It does not list deals it has closed but has some testimonies on the site. You can call the toll-free national number, fill out a quick request online or visit one of its 13 nationwide offices. The company is headquartered in Boston, Massachusetts, but has offices in Arizona, California, Colorado, Florida, Illinois, New York and Texas. Edward Voccola himself has had over 25 years' experience in the industry both in his own company and previously as a managing director at State Street Global Advisors and as senior Manager at PWC.
GCP Capital Group, LLC, is a commercial mortgage broker that operates out of New York but has closed transactions for real estate financing for projects across the East Coast. It secures commercial mortgages ranging from the low millions to hundreds of millions of dollars for a wide variety of properties.
This brokerage firm seeks the best deals on several types of loans, both long-term financing and short-term bridge loans, financing for acquisitions, construction or joint ventures, and mezzanine loans. It can also negotiate forward commitments in case you can't yet close on your loan but want to lock in the interest rate and are willing to commit to the lender.
This company employs four partners and 10 brokers that have experience in commercial real estate financing in other companies as well as with GCP. You can find brief bios of them online, including their backgrounds and their sales and specialties. They stay current with the changes in the market and seek out new lender opportunities and ways to find capital. They don't just look for bank loans but explore non-traditional funding sources such as venture capital, insurance companies and pension funds and private funding sources.
They handle commercial financing for projects such as office and retail space, multifamily buildings and condos, co-ops and hospitality services, and mixed-use properties. It can connect you to real estate lenders for construction projects and structured equity or joint venture projects. It also handles unique commercial opportunities. For example, it recently helped finance a group of summer camp properties throughout the eastern U.S. Although the bulk of their projects have been in New York, they have also closed deals in New Jersey, Connecticut, Florida, Massachusetts, New Hampshire and Michigan. You can see the firm's latest transactions on its website, where it lists the location, type of real estate and amount of the transaction.
This commercial mortgage brokerage has been around since the late 1980s and claims strong relationships with some of the most active lenders across the U.S. It works with you to find a financial solution to meets your needs and capabilities. You can contact GCP Capital by phone or email.
Marshall Commercial Review
Marshall Commercial Funding is a commercial mortgage broker operating out of Portland, Oregon, that handles real estate financing for apartments, offices, industrial complexes and real estate properties, with the loans generally running in the $1 million to $5 million range. It does not broker loans below $1 million.
The owner and principal, Doug Marshall, has worked in real estate since the 1980s as a financial advisor, loan officer and commercial real estate loan officer and then starting his own brokerage. He runs a small company that only does a few deals each year. You can find a list of the transactions on its website. Unlike other commercial mortgage brokers, this company provides more details about the individual cases, including notes about the property, special challenges, the number of real estate financial institutions approached, the number that accepted, and the financial details of the proposal. The one thing Marshall does not divulge, however, is the location of the properties.
In addition to detailed reports on completed transactions, it offers a sample rate sheet. It notes that the sheet "doesn't really mean anything" because your rates can change depending on the market and the specifics concerning your financial needs. Nonetheless, it can give you a good ballpark figure to consider while shopping around.
Marshall Commercial Funding will consult with you on your specific desires and needs, such as the closing date and any issues that might affect funding. It looks for the best options among multiple lenders, takes you through the loan process, keeping you abreast of the status and new developments and assists with closing. If for some reason it cannot complete the transaction, this brokerage promises to refer you to another company.
This commercial mortgage broker offers several resources to help small businesspeople learn about financing commercial real estate. In addition to an active blog and an eBook, Marshall also has a 10-part video series about commercial real estate finance. The website even has a recommended book of the month with a link to what looks like an outline of the book.
You can contact this company by phone or email. As with several of the commercial mortgage brokers we looked at, this broker's contact information goes straight to the owner.
Midwest Capital Funding Review
Midwest Capital Funding (MidCap) is a commercial mortgage broker that operates out of Kansas City, Kansas, and serves the area and the Midwest. It can help you get financing for a variety of commercial real estate needs in price ranges from $250,000 to over $50 million.
Like nearly all commercial mortgage brokers, this company can help you find loans to finance the acquisition of office buildings, multifamily complexes or industrial parks as well as for construction. It can find lenders to handle bridge or mezzanine loans. In addition, it can help you refinance an existing loan and obtain tenant lease loans, which are dependent on having tenants whose rent qualifies as equity. This firm also brokers sale leaseback loans, where you are buying a property from another company that intends to remain there and lease it from you.
Besides traditional financing options, MidCap can broker less common loans such as preferred equity financing, where the lender may become a direct partner in the ownership of a property or gains a liquidation preference. MidCap can walk you through the different implications of each loan type.
MidCap generally works with loans in the millions of dollars but can broker loans for as little as $250,000. It not only works with banks but also agencies such as Fannie, Freddie and HUD, and non-traditional lenders such as insurance companies. It does not list the latest transactions on its website, although it explains each type of service it performs. It not only summarizes what it will do, but also what lenders it can and may approach for that particular loan.
This company does not list the bios of all its brokers, but its principal, Taylor Grace, has over 15 years' experience in the commercial real estate industry, working in banks in the Kansas City area, and serving as a bank examiner for the Division of Finance for the State of Missouri. He also worked for real estate development firms, so he has seen the other side of the real estate financing coin as well.
You can reach this company by phone, email or fax, or visit its office. MidCap says it returns calls and emails within 24 hours.
Mortgage Equities Northwest Review
Mortgage Equities Northwest is a commercial mortgage broker that primarily works with businesses in Portland, Oregon, and the Northwest. It works with multiple loan sources to foster transactions specific to your needs and qualifications. It has recurring customers who are real estate developers, investors, property owners and nonprofits as well as businesses.
Like most commercial real estate financing brokers, Mortgage Equities Northwest can broker loans for the purchase or refinance of properties from office space to industrial parks, although it seems to have a stronger focus on residences. Its website shows multiple transactions concerning apartment complexes and is one of the few brokers we examined that specifically lists manufactured home parks and assisted living facilities under the property types it finds funding for. It has also helped broker loans for hotels and other hospitality properties.
As a result, it works with HUD, Fannie Mae and Freddie Mac as well as credit unions, banks, life insurance companies and private investors. The brokers work with lenders who have very specific requirements as well as those who have more traditional lending programs.
In addition to traditional property purchase loans, it can broker refinancing, mezzanine or bridge loans, construction loans and renovations. It also handles equity financing. This commercial brokerage works with loans starting at $1 million dollars, and its recent transactions range from $1–$20 million. In addition to helping you find a source of capital, Mortgage Equities Northwest acts as a liaison between you and your lender during the loan application process by handling all of the correspondence with the lender from the time the application is submitted to when the loan closes.
You can find bios of the company officers online. Several have 30 or more years' experience in commercial real estate financing. The company itself was founded in 2009.
Rates listed on the website; however, they are several months old. Nonetheless, they can provide at least a starting point for comparison and negotiation. You can contact Mortgage Equities Northwest for an up-to-date quote and to discuss your particular real estate financing needs. You can contact the firm by phone, email or visiting its Lake Oswego, Oregon, office.
Pergolis Swartz Associates, Inc. is a commercial mortgage broker that works mostly with properties in New York City but has also secured real estate financing for ventures in Pennsylvania and New Jersey.
This brokerage has over 35 years' experience securing funding for commercial real estate. Its recent transactions focus primarily on multi-family properties such as apartments, condos and apartment complexes with stores. However, it can broker financing for other commercial real estate and has done so recently for offices, retail and mixed-use properties. Its transactions usually run in the low millions, with a few exceeding $20 million in recent years. It has brokered over $3 billion in completed transactions over the "past several years," according to the website.
This broker not only works with acquisition loans but also with refinancing, construction loans, and mezzanine, bridge and hard money loans. It has experience brokering government-assisted loans as well. It works with a variety of sources, including banks and private investors, insurance companies and pension funds. Because it has a local focus, it works with thrift banks as well. Thrift banks are local financial institutions with a community focus that sometimes offer real estate loans at a lower rate than larger institutions.
The website contains thorough biographies of the brokers in the firm, including professional education and affiliations, specialties, and business-related activities. Many of its employees have decades of experience in commercial real estate financing. Some are not only brokers, but are also industry leaders that speak on the topic of commercial real estate.
The transactions page contains a running list of closed transactions, noting the type of financing secured, the amount, property type and location. The news feed contains flyers celebrating recent transactions with the same information, although the flyers sometimes include photos and the name of the broker that closed the deal. In this case, the news section is more useful if you'd like to narrow down a specific broker to work with.
Pergolis Swartz Associates, Inc. has an active Twitter account where it announces its transactions and posts about news affecting the world of business, real estate and financing. You can tweet the company or contact them directly via phone, email or the contact form on the website. You can also visit its office on West 37th Street in NYC.
The Rincon Group is a commercial real estate banking firm that arranges financing for commercial properties on the West Coast. While it does not call itself a commercial mortgage broker, it nonetheless negotiates with multiple financing sources to get the best loan for your business real estate.
Its brokers handle financing deals of up to $20 million for properties, from multi-family complexes to offices. Its non-residence transactions include warehouses, offices, multiuse buildings, restaurants and retail complexes. We found more fast food restaurants among its successful transactions than with any other commercial mortgage broker we looked at. The Rincon Group is located in San Francisco, California, and primarily secures deals in California and along the West Coast, but it has also brokered financing for properties as far as North Carolina.
This firm has working relationships with commercial and investment banks, credit unions, Wall Street investors, life insurance companies and private lenders. Since 2007, it has arranged over a billion dollars in commercial real estate loans. In addition to acquisition loans, the company can arrange refinancing.
The brokers at The Rincon Group are younger than those of many of the commercial mortgage brokerages we explored, but they are trained and qualified. The founder, Nils Ratnathicam, was declared one of the top 20 commercial mortgage brokers under 35 by Commercial Observer in 2014. On the website, you can read about the other brokers in the firm, including education, specialization, experience and DRE license, which is the real estate license required by the state of California.
The website has an exhaustive list of the properties it has transacted funding for. You can see photos, learn the location and amount of the deal, and get a brief idea of the type of loan and any special circumstances surrounding it. Also on the website is a running list of the most current market rates and a blog with news that includes "deal of the week" and current events concerning real estate and financing.
You can visit the company in its San Francisco office or fill out a pre-qualifying application through its website. You can call the company or look over the brokers' bios online and contact one by phone or email. The bios list individual emails and extensions.
Time Equities Inc. is a large, multinational real estate firm with several departments, including a commercial mortgage broker section. This service is available to anyone; you do not need to be financing a property found through TEI. It handles all levels of acquisition, development, conversion and management of commercial properties throughout the United States, Canada and Germany.
The company itself has been in business for 50 years, but its commercial mortgage broker division has been in existence for about 20 years. Nevertheless, it has longstanding relationships with over 100 financing institutions and has brokered transactions for hundreds of commercial properties. It can work with real estate financing from $500,000 to $300 billion. It handles acquisition loans and refinancing, loans for construction, bridge loans and cooperative underlying mortgages. The company is comfortable working with property owners, developers and cooperatives.
TEI works with a wide range of commercial properties, including garages, offices, multifamily residential rentals, stores and shopping centers. It also handles residential and commercial condos. A commercial condo is an office space in a building that you purchase rather than rent. The website does not show the commercial mortgage transactions it has brokered, but rather the properties is has for sale or rent.
If you decide you would be better off leasing commercial property rather than purchasing, Time Equities can broker that transaction for you. However, it focuses mainly on properties in New York City for this. This company originally served businesses in New York, but has expanded throughout the United States, Canada and Germany. The TEI team currently oversees over 15 million square feet of properties of commercial real estate, executes business plans and works with local partners. It can use this experience and skill to help you prepare the best application possible for garnering a commercial real estate financing solution.
On the website, you can view pictures of the employees with their names and positions in the company. The list covers all its departments, but you can click on the brokers to get their email addresses at the company. There is also a LinkedIn link on the images as well, but it only leads to the company's LinkedIn page; there is no information about specific employees. You can contact this company via phone or a contact form on its website, or visit its office in New York City.
Urban Commercial Mortgage Review
Like a couple of the firms on our commercial mortgage broker site, Urban Commercial Mortgage does not call itself a broker, but it does arrange real estate financing through several commercial banks, private financiers and government programs. Stationed out of Houston, Texas, this company nonetheless handles financing for commercial properties across the nation.
A look at its recent transactions implies that this company often works with businesses in the South, including Texas, Georgia and Mississippi. Unlike most of the commercial mortgage brokers we examined, Urban Commercial Mortgage has a stronger emphasis on retail and office properties than multifamily properties. A few examples include self-storage facilities, shadow-anchored retail centers, office condos, warehouses and stores. Urban Commercial recently handled refinancing for a chain of garages, consolidating the owner's individual loans for each and reducing the overall interest rate. It also handles property tax financing.
This commercial real estate financing company follows a methodical process. This process involves pre-qualifying and gauging client risks, defining loan objectives and alternatives, analyzing the property, researching the market (including conducting a physical tour of the property and area in question), and then marketing the transaction to several potential financial sources. These can include private lenders, banks or government programs such as SBA 504 lenders. The company collects the proposals, summarizes them and goes over each with the client, making recommendations. It maintains alternatives in case your commercial mortgage financing transaction falls through and continues to work with the client until the transaction closes. As necessary, the company interfaces with escrow, attorneys and others involved in completing the transaction.
The website lists its primary employees but does not give details on their qualifications. However, it does have a list of successful transactions and testimonies from satisfied customers. One recurring theme of the testimonies was Urban Commercial Mortgages' willingness to seek creative solutions to the client's financial needs and situation. This commercial mortgage broker says it is committed to working with the client to find the best solution, even in cases that do not fit the norm. Urban Commercial said it receives much of its business from repeat clients and client referrals.
You can find forms online to help you prepare for the financing process. You can reach Urban Commercial Mortgage by phone, email or an online contact form. If you are in Houston, Texas, you can visit the company's office.