Taking on commercial deals can bring residential brokers greater income potential

Stephen Kapalka, underwriting manager, APEX Mortgage Corp.

As published in Scotsman Guide's Residential Edition, March 2007.

For many residential mortgage brokers, commercial loans can open the door to a new world of opportunity and income. We must look at alternative markets to pursue, and the commercial area offers this opportunity.

Commercial lending covers many different types of properties, including multifamily, mixed-use buildings (e.g., buildings with apartments, retail and office space), retail centers, office space, bars, restaurants, warehouses, mobile home parks and auto-related properties. Once you start offering these products to your customers, you will be surprised by the amount of additional opportunities available to you.

Just by looking a little closer at your existing customer base, you'll likely find a few additional deals. For instance, many of your current customers could be business-owners who may need a mortgage to purchase or refinance a business property for themselves. Your existing customers may also own investment properties that have more than four units. These will offer an easy opportunity for additional deals.

By reaching out to these clients, as well as understanding terminology and documentation differences, you can achieve great income potential.

Income potential

With most commercial lenders, you can upsell the rate and earn one or two points in yield spread. Plus, you can charge your other processing and documentation fees, as well as additional origination fees, at closing.

Let's say you are doing a small commercial deal for $200,000. You are easily looking at a 4-percent or 5-percent total fee on that deal, if not more.

It is helpful for residential brokers to start with deals that are less than $1 million. There are many lenders in this market. Just as in residential, each lender generally specializes in a specific product type. From A-credit, income-qualified programs to nonprime credit with no income verification, many programs exist.

Page: 1 2 3 Next