- The function of commercial mortgage brokers is to find mortgages that will work for their client's real estate projects. To do this they first work with their client to determine how much money they need, what type of loans they will qualify for and what underwriting considerations will need to be established. The commercial mortgage brokers then takes this information and searches their databases for lenders and private investors who are interested in the type of commercial real estate venture the client is proposing. For example, some investors are interested in commercial property rehabilitation projects while others are more interested in investing in mortgages for the purchasing of existing commercial properties.
- Like in residential mortgage brokerages, commercial mortgage brokers can specialize in a number of different mortgage types. The first type of commercial mortgage is a basic commercial mortgage. These mortgages are typically used for purchasing commercial properties, either rental homes or office spaces. The second type of commercial mortgages that brokers can specialize in is exotic loans. These loans include interest only mortgages and balloon mortgages. In interest only mortgages you only pay the interest on the loan for up to five years, and then your balance is reamortized for the remaining duration of your loan. Balloon mortgages will amortize your loan over the duration of 30 years, but after 15 years your loan will expire and you will need to pay a balloon payment for the remaining balance. The final category of commercial mortgages that brokers can sell is jumbo commercial loans. These loans are for properties or real estate projects valued over $500,000.
- Commercial mortgage brokerages come in several sizes. They can be made up of several commercial mortgage brokers and a support staff, or they can be made up of nothing more than a single broker. Single mortgage brokerages have the advantage in that it allows the sole broker to reap all of the commissions and fees from the sale, however, multi-broker businesses attract more customers, which allows the brokerage to afford support staff, a larger office and other conveniences.
- Becoming a commercial mortgage broker has many benefits. First of all, you can work for yourself. Many brokers work from home, making it a good option for stay-at-home parents or people looking for a small business. Secondly, the income from commercial mortgages is excellent, as long as you put in the effort to promote your business and put in the hours required to meet the needs of your clients. Finally, the commercial real estate industry is much more stable than the residential industry, and lenders are usually more willing to invest in commercial real estate than residential real estate.
- While there is a huge potential to make a good living as a commercial mortgage broker, this is not a get rich quick scheme. There is a lot of leg work involved in attracting customers, processing their applications, managing your database and keeping up with the trends in your industry. If you don't put in the work required for this career, you will most likely lose money.
