Cha Ching! CRE Lending is on Fire.

As always thanks for stopping by.  I typically write from emotion from time to time when something really bothers me or there is a shift in the commercial lending and equity finance industry that I may have some insight or even first-hand involvement or knowledge.  As the commercial lending market continues to heat up to pre-2008 levels I am consistently asked, “Can I make money brokering loans again?”  The resounding answer is, YES!  Now that comes with some fine print.  First, you have to work at it. It’s not digging ditches, but it is a grind.   Second, you have to get re-educated even if you have been brokering for 20 years. This is not the glory days of 90% LTV’s, 3 points YSP, and no doc loans, although good ole stated loans are back in a big way! So rather than blathering on I’d like to show you what we are earning in todays’ environment.  If you stick around to the end of these 7 examples I’ll share with you the only joke I do at parties.  Lol Enjoy! 

Accounts Receivable Financing Amount of loan: $2,000,000
Commission earned by broker: 1% of transaction ($20,000) and then lender pays the broker 15% of the fees collected by lender. Total monthly fees lender collects are $60,000 a month so broker gets $9,000 a month for the life of the account.
Total time to close: 1 week

Asset Based Lines of Credit Amount of the Facility set up: $3,000,000
Commission earned by broker: 1% of transaction ($30,000) and then lender paid the graduate 10% of the fees collected by lender on a monthly basis. Total fees are $2,500 a month that the graduate will earn for a period of 3 years.
Total time to close: 45 Days

Bridge and Hard Money Loans Amount of loan: $10,140,000
Commission earned by broker: 2% ($202,800)
Total time to close: 5 days

Business Acquisition Financing Amount of loan: $665,000
Commission earned by broker: 4% ($26,600)
Total time to close: 14 days

Business Loans Amount of loan: $6,000,000
Commission earned by broker: 1% ($60,000)
Total time to close: 2 months

CRE Church Loan Amount of loan: $4,000,000
Commission earned by broker: 3% ($120,000)
Total time to close: 65 Days

CMBS CRE Amount of loan: $5,500,000
Commission earned by broker: 1% of transaction or $55,000
Total time to close: 50 days from signed term sheet

So as you can see commercial lending can be quite lucrative in 2016.  The markets have come back and are thriving. You just need to know where the money is because the deals are literally everywhere are you.  As promised...

A magician has this parrot who likes to give away the secrets to his act. So one day, the magician is doing a show on a cruise ship, and as usual, the parrot is ruining it for the magician "squawk, he put it in his sock, squawk, it's behind his back," So finally, the magician gets fed up, pulls out a shot gun, aims it at the parrot, and shoots. He misses the parrot, hits the propane tank and the ship blows up. The magician and the parrot are the only two survivors, and they are floating on two pieces of wood when the parrot looks at the magician and says:

"OK, I give up, where's the boat?" 

Happy Monday and Back to School!  It’s back to business.  Let’s finish the year with a big bang! $$$ See you next time.  CP [email protected]