Power marketing for commercial loansChip Cummings, CMCCommercial mortgage lenders
It came in as a floor call, but since I was the only one in my
office who pretended to know half of anything about commercial
loans, I got the yell, "Chip, there's a guy on line four who's
looking for money to buy a hotel and restaurant—you want
it?"
"Heck yeah!" was my quick, albeit naïve, response. That was
more than 20 years ago, but I still remember it like it was
yesterday. A young guy was looking for a $1.2 million loan to
purchase a Howard Johnson 125-unit motel, complete with the ugly
orange roof. Yes—boy, was I going to eat well the next month!
Of course, that experience turned out to be a very long, expensive,
tiring, exhaustive and disappointing educational lesson. It was one
that my associates teased me about for months. But I learned some
valuable things that year and actually did get to go back and
finance that dump of a motel almost two years later.
Nobody uses the phonebook
The first lesson that I learned is that anyone looking for $1.2
million and has the credibility to get $1.2 million doesn't use the
Yellow Pages to find it. Commercial loans do not come out of the
blue, on a floor call, from a directory ad or a phone book. At
least, the doable deals don't. To get good commercial loans, you
have to go out and hunt them down. While the occasional referral
from your residential customers will come in the door once in
awhile, most of those clients don't realize that you do commercial
loans, let alone know how to properly refer one to you. Such is the
point of this article—how to do some power marketing in a
highly competitive, cutthroat environment.
Keep your day job
Power marketing rule #1—You must realize that
commercial loans are based off of relationships—strong ones
that take a long time to develop. While the attraction of large
loan amounts and big commission checks is strong, the reality is
that you need to approach commercial lending as a long-term
endeavor. With that said, let's look at some specific ways to
efficiently market yourself in the commercial lending arena.
Finding the loans
Power marketing rule #2—Go where the loans are. My
manager back then had a great saying: "If you want to catch fish,
go where the fish are." If you want to find commercial loans, go
where the owners are. This means not locating business owners, but
rather building owners—there's a big difference. Many loan
officers research and network with business owners. As a national
trainer, I've had scores of students come back and say they've had
limited success with chamber of commerce groups, networking,
business letters, marketing flyers to various local business
owners, etc. Well, that's because they're not fishing in the right
pond. Most small-business owners don't own their own buildings.
They rent. More than that, they have invested their hard-earned
money and time into their businesses, not real estate, so they
don't even own many multi-family properties.
Commercial loans break down into several categories:
multi-family, office, retail, industrial and special use. By far,
the largest group of properties available for financing—and
where you should probably start—is in the multi-family
category. These properties are owned by various individuals, but
the owners usually have a few things in common. Most are
middle-aged or older, married, long-term employees or in management
positions. They own from five to 20 units, most are local ownership
and they are looking for a way to supplement their income, build
some equity to sell for retirement and can be found in local rental
property-owners associations or at the closest Home Depot on
Saturday mornings. Yes, there are exceptions, but that sums up the
target market for those properties. Larger multi-families are owned
by limited liability companies or small corporations and managed by
professional management companies. Finding the borrowers for these
different types of properties requires completely different
approaches. To get access to the local owners, I will go and speak
at Rental Property Owners Association meetings or events and form
affiliate relationships with suppliers such as plumbers,
electricians, lawn and snow maintenance companies, etc. I will
track down public records, do mailings and make phone calls to
people who I already know own the properties. They are the best
candidates for new properties and to refer similar-minded friends
and associates. For the larger projects, I will develop
relationships with property management firms and commercial real
estate brokers. I network with certified public accountants,
attorneys, investment firms and financial planners who have clients
that own those larger properties. Work within the niches. For
example, look for attorneys that handle foreclosures—don't
spend time marketing or talking to divorce attorneys.
Find a good broker
One of the first things you will want to do is develop a strong
friendship with a top-producing commercial real estate agent. These
are the ones who are part of firms that you've probably never heard
of and who wouldn't recognize a 1003 if they were sitting on one.
All they do is live and breathe commercial real estate.
Power marketing rule #3—Build a strong affiliate
resource team. Commercial agents are an incredible resource for
market information, leads and developing joint attack strategies.
Find a good, reputable one and take him out to lunch. Interview him
about what created his success. You are not looking for business
from him; you are looking for someone to work with for your
clients. You will be out on the frontlines with these borrowers, so
put yourself in a position to recommend a quality broker or two.
Their referrals will come later. Unlike the residential market,
there are very few for-sale-by-owner transactions. An agent will
almost always be involved and he will be able to provide financial
and analytical data on the property, as well as provide a feel for
the market itself. Build a strong relationship by developing and
demonstrating your commitment to the partnership through your
operational and marketing systems, creative financing options and
solutions and having a no-nonsense realistic approach to
transactions. Remember, there is very little emotion in a
commercial transaction. It's all about the numbers.
Start internally
Power Marketing Rule #4—Start with your comfort
zone. Examine your existing client base for anyone who currently
owns investment property. Are they looking for more units or
consolidating the ones they have? They probably don't even realize
that you do commercial loans! Then, using your existing client
base, look for managers or executives of mid-size to large firms.
Ask them to refer you to the owner or decision-maker at the company
to give you a foot in the door. Use that opportunity to learn more
about what the company does, where it's headed and what types of
financing will be required to get there. Company owners know and
socialize with other company owners. Ask for more names. One
referral can open some amazing doors when the right name is
attached.
Yes, it does take research. Yes, it does take networking (with
the right target market) and yes, you will be pounding on a lot of
closed doors. But frankly, that's the part that I love. For them,
it comes down to trust. The players want to know, "Can I trust you
to get it done? Can you get it done right? Can you do it in a
timely manner?" Don't shy away. Most salespeople fall too easily to
rejection or get sidetracked by running after the wrong target
market. That's okay, it makes me look a lot more professional in
the marketplace and I end up with a lot more deals than they do.
Learn the rules of power marketing. They allowed a 19-year old kid
to come back and finance a little 'ole Howard Johnson motel and
pocket a commission check that was bigger than most of the other
loan officers had ever seen. Funny—they aren't laughing,
anymore.
Chip Cummings, CMC is president of Northwind Financial
Corporation, an international speaker, trainer and consultant to
the mortgage industry and author of "Stop Selling and Start
Listening!—Marketing Strategies That Create Top Producers."
He can be reached at www.chipcummings.com.
