Hi everyone,

Currently, I am looking for funding on my first commercial deal, and I stumped upon some interesting question about commercial loans and I'm very much appreciate for any answer or to any insight.

Questions:

1. It is true that you don't need licensing to do commercial loan? If so, can you broker your own loan?

2. Does question #1 applied to the state of Texas?

3. It is true that you can partner up doing brokerage commercial loan? If so, how do I find such a partner and how does one get compensated?

4. What is the normal points and interest rate charged on commercial loan? and does the amount borrowed have any affect on the points and or the interest rate?


Your attention to my questions is highly appreciated and I look forward to all your responses.

Sincerely,
DVC

I just found out that Georgia dosen't require that you be licensed at all?
And in California, all you have to do is put up a $25,000 bond and not be a felon and you can start a loan brokerage company. The Dept of Real Estate in California, if you are doing loans and not licensed with the Dept of Corporation, woud like to see you licensed.
The way you can find out is call each States Dept of Corporation or a Finance dept of each state to find out. Don't exclude each States Real Estate Dept. just to be sure with them.

Answers:

1. Check with the State Government of the state you are in. On commercial deals, you can broker the loans anywhere. The issue is with the lender - they must be able to i.e. be licensed or chartered in each state to offer loans there. For example - I am in CA and have a Real Estate Salesperson's license and that allows me to buy/sell commercial and residential real estate and offer commercial/residential mortgages. I however focus only on commercial loans and real estate. I can fund loans nationwide.

2. Check with the State of Texas if that is where you plan to operate from.

3. Yes you can partner with folks to broker commercial deals. The agreement is based on whatever you and the co-broker agree upon. It is usually based on the amount of work done by each entity. For referrals a 25% fee is typical and for co-brokering a 50-50 split is usually the way it goes.

4. Commercial loans usually are priced at "par" which means that the rate you see is the rate the borrower pays with no rebates paid to the broker. The broker must charge points over and above what the lender charges. Typically lenders charge anywhere from 0 to 2 points (1 being the majority) for the loan and the broker charges 1 to 2 points. The amount borrowed can affect interest rate and points in some situations. Some lenders charge extra points or higher rates for loans below $250K or even below $750K. Some lenders offer rebates to brokers. Also, most lenders do not have rate sheets. Pricing on the loan is customized based on the borrower and the property.

My unsolicited advice to you would be to co-broker a few deals and decide if this is for you. Commercial deals take significantly longer to close, are more complicated and a lot more work than residential mortgages. The upside is that there are fewer brokers doing commercial deals and even fewer good brokers out there. Good luck!