As published in Scotsman Guide's Residential Edition, November 2007.
Many residential mortgage brokers have taken on commercial real estate deals in recent months as a strategy for keeping their businesses alive and growing. But the diversification doesn't have to end there. Commercial equipment leasing is another strong market to check out when your residential pipeline thins.
Commercial equipment leasing typically involves helping small businesses finance items such as office furniture, computer and phone systems, vehicles and other types of industry-specific machinery. Expanding your broker capabilities to include a steady market such as equipment leasing allows you to enter a world with increased income potential and less regulation than the residential market. The crossover starts by researching and selecting the right lending partner.
Start your search
First, educate yourself about the commercial equipment-leasing market and the resources and opportunities that are available to you. An Internet search can provide a wealth of information. Don't hesitate to call or e-mail equipment leasing professionals and ask some questions -- many will be happy to speak with you.
Once you have a more in-depth understanding of the industry, you'll need to pick a lender to work with. Consider using the following criteria in your search:
Direct funding: As a broker, your best bet is to work with the actual lenders, rather than going through a sub-broker.
Training and education: You'll often get the most from dealing with lenders offering opportunities to learn more about the equipment-leasing process.
Integrity: Working with lenders that are upfront and honest with borrowers about the terms of their leasing contracts can make things easier for you and your clients.
Transaction processing: Finding a lender that will take care of this service for you means you won't have to worry about payment and loan-structuring details past the application stage.
One-stop shop: Selecting one or two lenders that offer a broad range of equipment-leasing options can save you the time and hassle of searching for a new lender when out-of-the-ordinary deals arise.
Market your services
To announce your entry into the commercial equipment-leasing world, you should develop a simple, effective marketing plan. Often, your lender or funding sources can provide direction and best practices on how to conduct your marketing.
Although you will now be marketing to businesses in need of equipment, don't leave your residential services off of your marketing materials; you don't need to abandon your established brand equity because you've added a new specialty.
Small-business-owners need homes just like everyone else. If you do a good job with their equipment financing, they may come to you for home mortgages.
Remember, just as in the residential market, brokers who know their industry and provide great services in a timely fashion will fair well and get additional business from referrals. Ongoing referrals within the commercial realm are one of your best marketing strategies and are a valuable source for new business.
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Diversifying into commercial equipment financing can be a smart move during this rough spot in the residential market. You can rely on the equipment-leasing sector to stay strong and add additional revenue to your business. Take action now to join this field by finding the right lenders and by marketing your new services.
Joel Burroughs is the branch-office-development manager for Innovative Lease Services Inc., a national commercial-equipment-leasing company based in Carlsbad, Calif. For more information, please visit www.partner-in-profit.com.
Burroughs can be reached by e-mail at email@example.com.