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Commercial Department: From the Editor: February 2019

 

From the Editor

There are many paths to a lucrative business niche

For much of the year, the pages of this magazine are filled with information about the four main “food groups” of commercial real estate — industrial, multifamily, office and retail.

We also try to recognize, however, that many of our readers work to finance many other property types, from gas stations and car washes to churches, golf courses, self-storage facilities and even energy-related properties like solar farms. To that end, the focus of our February magazine is niches. The great thing about this topic is that it encompasses almost anything of relevance to commercial mortgage brokers and lenders. c_2019-02_FTE

If you need some examples, Rob Diodato of York Commercial Finance touches on a wide variety of niche-loan products and property types in his article, “Niche Products Open Doors,” on Page 74. Diodato says that you can market these services to commercial real estate agents, who often fail to close a deal because they don’t know who to turn to when an outside-the-box property needs financing.

Even if you’re a broker who works exclusively within the four major property types, there are ways to create a useful and profitable niche. We have two articles this month about the multifamily sector that can help you unearth some hidden gems.

First, on Page 33, Brandon Pate of Hunt Real Estate Capital discusses affordable- housing opportunities in some of the little-known markets near his backyard of Birmingham, Alabama. These smaller cities — such as Charleston, South Carolina and Gulfport, Mississippi — are growing employment centers that have strong demand for rental housing. Conventional loans through Fannie Mae or Freddie Mac, viewed through the lens of niche financing, are often the way to go in these situations, Pate writes.

On Page 88, Adam S. Finkel of Tower Capital backs up those assertions while arguing that rising interest rates are poised to benefit the multifamily sector. From an investor’s perspective, gradual rate increases can often be neutralized by increased tenant demand, which pushes up corresponding rent prices and net operating income for these properties, Finkel says.

Of course, anyone looking to develop a business niche has to find customers in order to be successful. That’s when a strong and detailed marketing plan can make all the difference. On Page 59, Ryan Roberts of Triumph Capital Partners offers up a “Marketing + Market Fit” plan designed around high-tech and high-performing ad campaigns.

Bridge loans can serve as niche-loan products, too, and working with the lenders who offer them can result in a tailor-made solution for an otherwise tricky deal, Will Nelson of Columbia Pacific Advisors says. On Page 38 provides an example of bridge financing by focusing on a deal using cross-collateralization of two properties that needed upgrades so they could generate income in a hot market.

Finally, if your niche is hotels, you should check out our Q&A with STR’s Jan Freitag. On Page 20, Freitag offers a numbers-based approach to investment opportunities within the hospitality sector. The possibilities here are virtually endless, as there are more than 54,000 hotel properties across the country that serve more than 5 million people each day, according to the American Hotel and Lodging Association.

The article-submission deadline for our April magazine is Feb. 6. April’s focus on green practices is another niche for mortgage brokers to investigate. In 2017, Fannie Mae originated more than $27 billion in green financing for multifamily housing, so there is huge potential for working in this area. We’d love to hear about more ways for brokers to capitalize on the trend of environmentally conscious real estate.  


 

Neil Pierson is editor in chief of Scotsman Guide Media. Reach him at neilp@scotsmanguide.com or (800) 297-6061.

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