For residential brokers looking to increase business by expanding their product offerings, small-balance commercial mortgages are a great option. And for brokers new to commercial mortgages, connecting with borrowers who need to finance multifamily properties is a great way to transition into the industry.
Why target the multifamily market?
Multifamily properties are reliably popular with commercial lenders. The size of the property, the loan amount and your borrower’s financial situation will determine the type of lender willing to finance a specific property, but banks and alternative lenders alike lend on multifamily properties.
Additionally, multifamily properties remain in demand for individuals who aren’t yet ready to purchase a home, so they’re a safe bet for investors and lenders. And if you’re looking to start with small-balance commercial mortgages, there will be plenty of borrowers looking to finance multifamily properties, possibly among your former residential clients.
What do I need to submit a loan?
A completed 1003 or application:
Make sure that when your borrower fills out their application for a small-balance commercial mortgage that all relevant information is included.
A credit report:
Most lenders prefer tri-merge reports, but making sure that the report includes at least one score and tradelines is usually enough for a small-balance commercial lender to evaluate your borrower’s request.
A summary of the deal:
Include how your borrower plans to use the money and detail any past financial challenges here.
Additional documentation as required and photos:
Talk to your lender about additional requirements such as a rent roll or profit and loss statement, and send them what they need. Recent photos of the property will also help your lender to evaluate the commercial mortgage request.
Multifamily properties are a great way for residential brokers to get their start in the commercial mortgage industry. It’s a strong sector of the market and submitting deals to small-balance lenders is a simple and quick way to expand your business and increase your income.