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   ARTICLE   |   From Scotsman Guide Commercial Edition   |   February 2013

5 Tips to Develop New Niches

Expand your pool of products to cater to clients’ long-term needs

Commercial mortgage brokers  who want to keep ahead in their business must understand that being the best involves more than just getting competitive rates and terms for their clients. A broker’s thorough understanding of a client’s industry or specialization is often what enables the broker to best serve clients in the long run. A comprehensive knowledge of different market niches helps top performers stand out from the competition.

Brokers always must be observant of market trends to ensure that they can respond to their clients’ needs appropriately. Top brokers keep up to date with the latest requirements in the market and look for the best-matching products and terms for their clients. They also work to offer the equivalent of a lifelong relationship: Clients can expect these brokers to follow up consistently with their financing needs, to update them on upcoming products and market trends, and to keep tabs on their satisfaction level with new acquisitions.

Conversely, mortgage professionals who simply wait and hope for a referral from a former client are settling for less and missing out on many opportunities. They may be moving forward but at a much slower pace than those who are proactive and looking to grab a substantial market share.

If you feel like you’ve been stuck in your business with the same small pool of products, you should consider the benefits of expanding your reach into different market niches. The first step is to find a niche that relates to your interests — even if it is just a personal interest. For example, if you have a love of animals, veterinary practices might be the niche that works for you. The “neat freak” in you may be especially adept at financing self-storage facilities. A keen eye on market trends coupled with an innate interest in a given sector is a winning combination that will help grow your business.

Remember, however, that taking on a new niche can be complex. Clients truly appreciate a broker’s honesty and willingness to go the extra mile to help with their particular situation, even if that involves bringing in a new product that the broker doesn’t routinely offer. With an understanding that you can’t know every product on the market, being proactive in researching target industries to find niche products that will better serve prospective clients can make you the go-to person in your market.

Here are five ways to help you establish your business in new niches:

  1. Research area drivers: Understanding the trends in your area’s commercial real estate market is essential. For example, if there is an abundance of office space for sale in your area, place advertisements in publications that target professional practitioners like doctors, lawyers and dentists. Know their industry-specific requirements — for example, what they need in terms of cash flow — to offer products that respond to these requirements. For instance, purchasing a building may be a viable option for some practitioners who see the advantage of getting into an office building for a 15 percent downpayment or less, and having ancillary income from filling the other offices in the building with professions that feed off of theirs. Explain the benefits of owning versus leasing the office space.
  2. Understand demographics: If you live near a college town or a military base, self-storage typically is a key need for that demographic. Market your services to self-storage facilities and offer products that are not available at local banks. Send out brochures offering your best products — for instance, loans with longer amortization periods or cash-out refinancing for improvements like new roads and recreational-vehicle parking and storage if they have unused vacant land on the property.
  3. Connect with Realtors: Relationships with real estate agents are another excellent source to generate niche business. Top performers gravitate toward each other. If you’re trying, for example, to expand your business in triple-net-lease properties, find top Realtors working in this segment and connect with them. Learn their acquisition patterns and find products that can help you advance in this niche. You also may consider joint marketing efforts where Realtors can post the latest listings on your website in exchange for an advertisement on their websites showcasing your best rates and terms. It’s a win-win situation, and neither party is wasting marketing dollars on random ads in the local paper.
  4. Be proactive: Keep an eye on any potential business opportunities, and find products that fulfill the needs of that particular situation. For example, if you drive by a construction site that has been dormant since the onslaught of the recession, stop, note the phone number and call the developer. If you can work out a loan from one of the construction funds that are becoming available again, you may give the developer the opportunity to revive the project.
  5. Spread the word: If your goal is to establish yourself as a resource in a particular niche, you should showcase your expertise through every possible medium — on the Internet, on your website and through social media websites like Facebook and Twitter. There likely is a large untapped audience within your own social circle, and a daily post of new products may spark a conversation that can enhance your bottom line.

There are countless industries that require niche-lending products, and commercial mortgage brokers who do their research, network with other professionals and capitalize on opportunities can capture a growing market share by providing products that best serve today’s financial requirements. Brokers who expand their reach into niche markets can increase their business and stand out from the rest.

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