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Pivoting from Residential to Commercial: A Guide for Residential Mortgage Brokers

Company News
Posted on 
November 1, 2023

Residential mortgage brokers often experience fluctuations in the real estate market. Pivoting from residential to commercial mortgages during a market slowdown is a strategic move for mortgage brokers looking to diversify their business. By expanding your knowledge, leveraging your residential experience, and collaborating with lenders, you can thrive in the commercial real estate industry and ensure long-term sustainability for your business.

Let’s review the basic differences between residential and commercial mortgages. Residential mortgages are consumer loans with the intention to purchase or refinance a home. They are collateralized by single family homes or small multi-family buildings. Lenders will look at the debt-to-income ratio of the borrower to assess their credit worthiness.Commercial mortgages provide loans to business owners or investors to purchase or refinance a variety of property types. Collateral for commercial loans can include apartment buildings, retail spaces, warehouses, light industrial buildings, offices and mixed-use properties just to name a few. In commercial real estate, the property income needs to cover the debt.  

These nuances, though, are just the beginning. The commercial real estate market is more layered than the residential real estate market. As a commercial broker, you will need to understand the economics, markets, and landscapes of businesses, and how they are part of a business owner’s or investor’s decision in securing a commercial property. Your experience as a residential mortgage broker provides you with a foundation to build upon as you expand your knowledge. Be sure to leverage your ability to  analyze financials, effectively listen to your client’s needs, and understand the loan process from start to finish.  

Now it is time to leverage your connections! Ask your current lenders and real estate agents if they have experience in commercial real estate or if they have connections and will introduce you. You will want to collaborate with investors, property developers, commercial agents, and brokers to immerse yourself in the industry. Attend industry events, join local business associations, and leverage social media platforms to connect with professionals in the commercial sector.

Last, be sure to market yourself. Promote your transition to commercial mortgages through your website, social media, and traditional marketing channels. Highlight your expertise, the benefits of working with you, and your ability to navigate both residential and commercial markets. Create informative content related to commercial real estate on your website or blog.

At Apex Commercial Capital we go beyond the numbers to help our brokers succeed. With more than 30 years of proven financing solutions for commercial real estate and the experience to navigate constantly changing markets, Apex is uniquely positioned to assist residential mortgage brokers interested in making the leap to commercial mortgages. Call (800)262-APEX today to talk with our team of small business mortgage specialists about how to get started.

Andrew Tauber is the President of Apex Commercial Capital and Executive Vice President, Managing Director of Firstrust Bank Lending Subsidiaries.


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