From Rags to Riches in Commercial Mortgage Financing!!

Today we will discuss, "The 10 secrets to commercial Financing Success."



Secret one: HAVE A REASON.



Now stay with me here. I know you're thinking: Have a reason?? C'mon John! Tell me about commercial financing. I'm going to. But let's start here.



Alot of what I'm going to tell you is about being focused on one thing. Why are YOU going to do this?



Do you have kids starting college? Do you want to buy a house, a ferrari?



Do you want to pay off all of your debt, including your mortgage, or mortgages? (This was one of mine.)



Do you want to be able to have the freedom to work when you want to or if you want to? ( This was the other one of mine.)



You can do this with commercial loan financing, originating, brokering or whatever you want to call it.



And I'm talking about next year, not in 20 years!!



So today, tonight, sit down, get quiet and figure out what you want and how much money you need to do what you want.





Ok, so now you've figured out how much money you need to do what you want to do. Now you need to figure out the path to get it.



Secret 2: EDUCATE YOURSELF



You're going to have to figure out what types of loans you want to do. There's endless choices.



Do you want to do apartments (one of my favorites), office, retail shopping centers, single use, multi-use, NNN, etc., etc.



Whatever you do, pick ONE for now! Believe me when you start out you will be desparate for business and to get some sort of momentum or traction. So you will take EVERYTHING that comes your way! DON'T DO IT!! I did, and let me describe it to you. Have you ever seen a dog chasing it's tail? You get the picture.



Don't be a jack of all trades and a master of none. You'll get nothing accomplished because you'll be looking for lenders for loans. That's backwards. You want to be looking for loans for lender's and their programs that you already have setup.



So do some research and educate yourself on what's available.



Now, here are the tools that you will need to succeed at commercial lending. Here it is: a phone and a fax. That's it. Surprised? Something that will make your life a whole lot easier is a computer with an internet connection for your research. But you can always go to the library and use theirs if you don't have one. I use email a lot, but you can get a free one if you can get the internet connection.







Secret 3: PICK A PRODUCT.



You've done your research.



From your research, you now pick a loan product. You only need one loan product and one lender.



Come up with a program that is not hard to close. How do you know? From your research!!



I like apartments. My program has a 40 year fixed interest rate of around 6% on a construction perm or substantial a 90% loan to cost. There are no balloons and no recourse. (No personal guarantees for those of you who don't know what that means.) If you don't understand that, you need to do some research.



But you can do anything you want. That's just what I do. But do only one thing to start.



I can't stress enough how important that is.









Secret 4: PICK A LENDER.



Ok. So now you've figured out how much money you need to do what you want to do.



You've done your research.



From your research, you've now picked a loan product.



Now, pick a lender. Here is a link where you can find a bunch of them:











How do you find the one you've got to use. You've got to call them up. This is where the phone comes in. When you call them, you've got to interview them. I have a three page form I use to interview new lenders.







Basically you want to ask them: Do you have any marketing materials for me to use, any forms for me to use? Will you pay me?! You want them to sign an agreement with you for your fees. Otherwise, you're going to have to get your borrower to sign one and that can be a deal killer.



I always ask the process to submit them a loan from submission to closing. What do I do? What do they do? How much money up front do they take and what is it for? Third party reports or up front lender fees?



I could go on for thirty minutes of what I'm looking for, but the most important thing is, can I work with this person?



Are they looking to limit my fees? Do they have a hunger to get new loans and close them? Do they want to keep telling me about themselves or listen to what I need to help me close my loans?





Secret 5: FIND YOUR BORROWER.



Ok. So now you've figured out how much money you need to do what you want to do.



You've done your research.



From your research, you've now picked a loan product.



You've settled on a lender and signed a fee agreement with them.





Now you need to get a borrower.



You need to ask yourself, who is my borrower and where does he/she hang out?



Personally, I like professional developers and investors. Why? Because these people are professional borrowers and will come back to you again and again, if you do a good job for them.



Where do they hangout? Associations. Contact for example, apartment developer associations and make contact with their members. Management companies. Contact apartment management companies and interview them. You probably will need some regerences, i.e. other developers. Get it? Where else do developers hang out? They have to get permits to build their projects. Folks, that's public record.



Let's load up the kids and go to the library, 'cause we're going to have to do some research. Get it?





Secret 6: CONTACT YOUR BORROWER.



Ok. So now you've figured out how much money you need to do what you want to do.



You've done your research.



From your research, you've now picked a loan product.



You've settled on a lender and signed a fee agreement with them.



You've figured out where your borrower hangs out.



Now you need to contact your borrower.





I prefer to talk to my borrower's directly up front. I WILL NOT talk to a borrower with more than one person between me and the borrower. And then I talk to the borrower ASAP.



When I talk to a caller, the first question I ask is, "Are you the borrower?", and if they are not, the second question I ask is "Who is paying you?"



Folks, I do this religously. First of all, I rarly deal with brokers on my apartment loans. However, there are cases where I do deal with brokers on my hard money loans,(A topic for another ecourse.),and if you don't get this out of the way upfront, they will wear you down to a nub thru the process of doing the loan!



Ok, back to this.





What I do is call up my developers/investors off of the list I developed from my research of where my borrowers hang out.



My list includes as much contact information as I can get i.e., phone number, fax number,email address, etc.



I call up and ask for the developer by first name. For example, " Hello, this is John calling from Atlanta, is George in?" Usually they will say just a second sir and put me right thru.



When I get George on the phone I say something like this: " Hi George, This is John Farina calling from Atlanta, Georgia. We finance apartments and I understand you develop and buy apartments. I was wondering if you had a project we might look at funding for you?" AND THEN SHUT UP.



Let him/her (Georgiene) talk. They will probably say, "Tell me what you've got." Oh no, what will you say now.



Remember, when we did our research and got our lender to give us marketing materials. You read it off the marketing materials! I like to come up with a one page flyer for all of my programs. Most of the time the lender does it for me.



Usually George says, "Do you have anything for me to look at?" I say, " Sure George, I'll fax it over to you now. Is your fax number 000-000-0000?"



George says "It sure is." And you fax it over. Remember, we needed that fax machine. That's what it's for. Sometimes, George wants you to email it. Then you're going to have to load up the kids and go to the library, again. So, if you don't have a computer, push for the fax.



And then you call the next one.



Sometimes, George will say or call you back and say "Hey, I've got a project for you!" What will you say now? Guys and girls, I always reduce the info I need to one page. So, you can say George, this is what I need to know or better yet let him fill out the form.





Secret 7ROTECT YOUR PAYCHECK.



Ok. So now you've figured out how much money you need to do what you want to do.



You've done your research.



From your research, you've now picked a loan product.



You've settled on a lender and signed a fee agreement with them.



You've figured out where your borrower hangs out.



You've contacted your borrower and got a project to fund.



OK. Nine and one half times out of ten your lender is going to want to talk to the borrower, partly for the same reason you want to. To make sure they exist. I always prep my borrowers to make sure they know what's going to happen.(Remember that lender interview.) I also prep my borrowers to make sure they understand their own deal, if they don't.



Now, remember this, once they borrower and the lender talk they don't need you anymore, especially the borrower! You'll call the borrower and say, "Hey Bob, this is John Farina, your loan originator." And Bob will say, "John who?" Just kidding.



Seriously, you had better have an agreement with someone and I prefer the lender. If the lender thinks you're a source of loans, he's going to protect you, probably, anyway. But I sleep better having an agreement with him.



So, get you agreement with you lender, before you introduce them.





Secret 8:INTRODUCING YOUR BORROWER TO YOUR LENDER.



Ok. So now you've figured out how much money you need to do what you want to do.



You've done your research.



From your research, you've now picked a loan product.



You've settled on a lender and signed a fee agreement with them.



You've figured out where your borrower hangs out.



You've contacted your borrower and got a project to fund.



You've protected yourself with an agreement from your lender.



Now it's time for the borrower/lender meeting.



Today is going to be a short chapter to our ecourse.



Basically, you've preped your borrower and set up a conference call.



Sometimes, this is on "spur of the moment" and you get the borrower on their cell phone. Other times it's setup and everyone calls in to a type system.



Whatever the case, the lender and the borrower are going to talk. I basically don't say anything and just listen. I always feel like if I answer the questions for the borrower, it will be worse. Hopefully, the borrower isn't full of ego and just answers the questions and the answers match what you've told the always hate it when the lender and the borrower start yelling at each other, but it happens. That's why you need to talk to the borrower and not a broker.



Usually, the borrower hangs up and you talk to the lender to see how it went. And, before I get off the phone with him, the borrower is calling me to see how it went.



Secret 9: MOVING TO CLOSING.



Ok. So now you've figured out how much money you need to do what you want to do.



You've done your research.



Ok. You get the point.

Now it's time to close



Folks, with my lenders, they handle it.



I try to be as helpful as I can. But, basically, the lender works with the borrower to get the money for the third party reports and then gets the reports.



I check in from time to time to see how it's going and mostly try to be helpful to my borrower if they are looking at another project or if they have a referral I can help.











Secret 10: PUTTING IT ALL TOGETHER.



Congratulations, you got paid.



That's it guys and girls. That's how easy it is. The dangers are that you won't believe and give up. You'll say that nobody wants to do a $10,000,000 with me. Or that developer thought I was stupid and quit.



Listen, if you don't get results you want from one call, just move on to the next one. If you don't get the results from one list or list from a state, just move on to the next one.



Remember, it is no big deal for an apartment loan to be $10,000,000, REALLY! If you do 3 of them at 1% commission, that's $300,000 commission to you. YOU'VE HAVE GOT TO BELIEVE IT. You work January thru March and take the rest or the year off.



It's for real!



That's it for today.



I hope you've enjoyed reading this as much as I've enjoyed writing it.