Expert: Phil Nicols - 3/6/2008

Question
Hi. I was wondering if you can tell me where commercial loan officers usually get their leads from? I've heard of companies that sell leads from people looking to buy a residential property, but not for commercial. Thanks

Answer
hi Danielle

Thanks for calling.  

I had an entire answer written out for you and then I realized that you're looking for the source of their "leads" not the source of their "funding" so I'm starting again..

Years ago it used to be that if you had a dollar a bank would lend you two dollars.  Now, if you have $100, you'll be lucky to get 50 then when you put in some commercial factors, that 50 gets whittled down to about 30!  Most knowledgeable commercial investors already know that -- this is why they will not go to a standard Bank for loan.  Rather they will approach life insurance companies, private lenders, and others that have put out money against commercial properties in past -- things of the chartered banks will only take on if the client and the property both fit perfectly with in their form -- and there has to be two moons in the sky as well.

I take it you are a loans officer looking for more business?  Well, I can tell you that as a popular commercial real estate broker, I must receive at least 50 lending proposals by e-mail, phone and fax per day from various lending institutions and commercial lenders.

They send me updates on the daily rates, and details about deals that they recently financed.

Lots of business going on out there!  Even in a recession, real estate is traded every day!  If it's not an investor looking at a DL planning to get rich, it could be between families, between businesses, or even an internal change of management. In each case, the property usually requires new financing.

And even if the property isn't changing hands, lenders still want them to change the financing over offering better rates and terms.

The best loans officer's I have encountered are the ones that can push the envelope. Most want to stay inside the box, and if the client doesn't fit perfectly within their form, then they are not interested -- and they wait for the last second to tell you so, when you're conditional period is almost up.  I avoid this type of lender like the plague.

As far as "purchasing leads" don't even go there!  There are times of web sites out there that entice people to get an opinion of value on their properties -- once the person puts in their name and what not, the web site owners compile the list and try to sell it to other people (like me) but I don't buy them because they are certainly not qualified in any respect.  Let's put it this way, with Donald Trump go on a web site and ask for an opinion of value on his properties? What's worst, is that the most unscrupulous out there will simply take names and numbers from a phone book and tell you that they are qualified leads! How can you verify that they are interested in commercial money and/or have the wherewithal to carry out such a deal?

So contact your local brokers, ones that You know are active in the market. Contact landlords who already have properties -- these people will always be interested in commercial money -- and make sure you yourself know about the commercial market. You should specialize in a geographical area as well as a small sector of the commercial market. This will make your job a lot easier. First of all if you live in San Diego, California and know the local market there, that isn't going to help you if you are buying selling or lending money on a property in New York where values can change dramatically from one street to the next.

Second if you are lending money on commercial plazas, you should know the retail business backwards, who the good tenants are, the best managers are, if there are companies in trouble etc. and you should focus on the one sector of the economy even though you may be tempted to lend on a land development project for instance that you may know nothing about.  That would be my advice.

Lending money is good for the economy. So you will not only be helping yourself and your client, but also the economy in general so lend more money!

Best, Phil