Jack Miller gives some tips for mortgage brokers.
Gelt has been helping commercial real estate and investment borrowers since 1989. When your bank says NO, we say YES!
“Hey, hope you’re having a great day. Wanted to make another video with some tips for mortgage brokers, mainly commercial mortgage brokers, but could be residential mortgage brokers too. The truth is it’s really anyone in sales. You know, we find as portfolio lenders that a lot of brokers, frankly, don’t invest the time that they should to submit the deals in a proper way.
So, a couple of things I’ve learned over my past 30-something years being in the business, initially as a broker and a lender. The first thing is, or before I hit the first thing, is in sales, we get tons of emails, and I’m always amazed by some people don’t have their contact, their phone numbers on their emails. So, something very basic, put your phone number on your email so people can communicate with you. Okay, forget that. The next thing is, when you’re sitting and submitting a deal to a lender or to an underwriter, make sure you’re submitting complete information. The more work you do, the better the chances of the deal being approved.
Taking the time to learn about the deal, learn about the borrower’s motivation, learn about the collateral, learn everything you can, and then transmit everything—the good, the bad, the ugly, the smelly, the beautiful—to the lender or the underwriter and lay it out in a fashion that they could understand it easily, and it flows. You know, the reality is, if you want to be successful, the more work you do upfront and the more you invest your time and energy in a deal, the greater the likelihood of the deal going through. Now, there’s a lot of other things too, you know. Don’t send a construction loan to a lender who doesn’t do construction or don’t send a loan for 100 million dollars to a lender who does one-to-three-million-dollar loans. So, you have to understand the lender and the borrower, the lender and the lender’s guidelines. So, make sure you, as a mortgage broker, understand the lender’s guidelines. But once you understand the lender’s guidelines, if you submit a complete deal with all the information—debt service coverage, rental income, whatever it is—the more likely it’s going to be approved.
The reality is, mortgage brokers, by and large, are paid on commission and paid at success, not just for wasting time. So, you want to be successful, and the more information and the clearer and fuller picture you can give a lender or an underwriter, the more likely you’re going to be successful because oftentimes—and I can tell you, both, I started as a loan officer, I’m in sales, and you know that’s what I do. I’m in sales all day long, I’m pushing deals and going over deals. And I learned that the more complete picture that I give someone about anything, and this is true in life, anything, the more complete picture—the good, the bad, the ugly—the easier it is for them to say yes. And again, sometimes mortgage brokers throw stuff out there just to save time, and I really—I don’t want to be critical of mortgage brokers, but the people who throw stuff out there really aren’t doing themselves or their clients a justice. Just like any profession, you need to take the time to learn a deal and to present it in the correct format, and that’s a large portion of what you do. You know, you’re a professional, mortgage brokers and mortgage bankers are a professional, just like a doctor, a lawyer, or anything, a radiologist. You need to take the time to learn, and you need to take the time to present it.
Imagine if a lawyer went into court for a trial, and he did no prep. He didn’t review the information; you know, his client sent him the information, he printed it out, and he gave it to the judge or the prosecutor. What would happen? It would be a disaster. So all I’m saying is, mortgage brokers, take the time to learn, take the time to understand, and take the time to put it in the proper format. Don’t be afraid to waste time because when you invest that time, you’re going to get the best yield you can, and you’re better off investing that time because it’s just going to increase your likelihood. And what do I mean? Understand the borrower’s situation. If it’s a refi, if it’s a purchase, why is he looking to refi? Whatever the situation is, is he in default, have they made all their payments on time? Is it rate and term, is it cash out? What are they doing with the cash out? You know, really get into the borrower’s motivation for the reason for, is it a need, or is it a what? Same with a purchase, why are they purchasing it? Then get into the property and understand the income, the expenses, all of the relevant things about the property, the location, everything relevant. You know, we often see someone will send us over some information, and frankly, the information’s half-baked. They’ll say, okay, you know, the income’s five grand a month, and we’ll say, what are the expenses? And say there’s no expenses, and we say, of course, there’s expenses, you know, there’s always taxes, there’s always insurance, and there’s vacancy, there’s repairs.
Take the time to learn it and to present it that way. Don’t just give a lender or an underwriter what the borrower gave you. What I would do if I was a broker is come up with your own Excel format, and by the way, you could use our Excel format. We have one under our submission form; put your logo on it. We purposely send it in Excel, not hard-coded, to make it easier for Brokers to put their information on it. There are different tabs, and complete all the tabs, and by doing that, you’ll present a clearer picture of the deal for you to understand so you don’t waste your time on something that’s not going to go. The reality is, in this business, a lot of deals don’t close. You’re spending your good order time on that deal, and to a certain degree, your job is to handicap a deal. You know, within the first 30 seconds of you speaking to a borrower, you should be able to say, “Okay, I think I can close it,” or “I think I can close it. Is it worth my time spending on this deal, or is it not worth my time spending on this deal?” And if it’s not, you just may want to pull out, politely tell the borrower, “Thank you very much, but you don’t think you’re the person for this. You just don’t want to waste your time on it because you don’t think it’s going to close. If you think it’s going to close, then you want to make it the best chance. If you’re committed, you want to give the best chance of closing, again, so the borrower gets what they want, a closing. You get what you want, the loan closing, and your fee and self-understood. A lender gets a good solid loan. So, invest the time to really dig in. Because frankly, I see, and I feel bad. I don’t want this to come off as I’m bashing Brokers; that’s not my purpose. My purpose is to educate Brokers and to instill in them that they’re professionals. If they really want a deal to close and really want to be successful, they don’t have to invest time and energy in not just being a paper pusher to push emails back and forth. What I would also do, just, and I realize, I apologize, I’m going off on a tangent on this. I’m sorry. It’s just whatever. What I would also do is when you first get a deal, don’t rush the borrower off the phone. Spend 10 minutes, 20 minutes, a half hour, an hour, again, as I said, with the borrower to really dig in. The borrower will respect it; they want to give you that information, and it’ll help you do a better job presenting it. A couple of other things that I could think of very quick, and I promise I’ll end this quickly; you’re probably sick of me, and I apologize. Oh, I forgot to say, subscribe to our YouTube channel; I’m supposed to tell you in the beginning, but I forgot. A couple of other things are, look, we live in a world of imperfections, and we all have pimples on our face and other parts of our lives, and we all have histories, some good and some bad. Don’t try to cover over the bad to an underwriter or lender. I would get the bad out upfront right away because it’s going to be, the lender is going to find out anyway, and it’s better to deal with it upfront rather than the back end when one, you’re wasting and you’re spending your time, the borrower’s hopes are set, and their expectations are set, and the lender is spending their time on it. You know, and you lose credibility. This happens all the time where Brokers and borrowers are, I think, hesitant to tell lenders the whole story or the bad. We would rather, and we’re a portfolio lender; we’re not selling our loans to the secondary market or Wall Street or, you know, we’re a private lender. So, we get it all, but it’s much better if you get out the bad news or the problems upfront, whatever they are, whether it be vacancy, the tenant’s not paying, bankruptcy, whatever they are, divorce. Get it out upfront and let all the parties know; look, sometimes a deal will die. You know, when I get, I sometimes get the feeling that Brokers and borrowers hide the full picture because, look, you go out on a first date, and you don’t want to say, “I have a gas problem” or “I belch” or “I’m smelly” or whatever. It’s not exciting, but in this business, I’ve just learned it’s better to start with almost the bad and let the good follow because if not, it’s going to catch up with you, and you’ll have problems. So again, the purpose of this video is to be professional, invest the time to learn the deal, put together the debt service coverage.
You know, I happened to speak to a broker; you say nothing wrong with it. Really nice guy, sort of a work friend. He sends us a deal, and we ask them; he says, “Well, you guys put it together.” You know, fine, we did, but it’s not really professional when you do that. When you send over a deal to a lender, send over a complete deal, put over a debt service coverage, but over all the income, the expenses. If it’s a value-add deal, that’s fine; do projections. Spend the time to put together a detailed package for the lenders. When you do that, you will increase your income dramatically, dramatically, whatever you, I know 10X. Is the big word right now for the past couple of years; you’re going to 10x your income. I’m not such a big fan of the word 10x, but you’re going to 10x your income if you spend the time to get to know the deal, to get to know the borrower, to get to know the lender as well.
Another thing I keep going on is what I would do is if I was a mortgage broker and if you have five lenders or ten lenders, whatever lenders that you work with, I would have an initial call with them, their underwriter, whoever you can, and soak them, suck their knowledge out, learn from them. What kind of deals, I would say, what kind of deals do you want? What kind of deals don’t you want? Learn their sweet spots and learn their trigger points. Um, and you’ll have an idea
rather than just shoot stuff out to 10 lenders because when you do that, you’re wasting your time and you’re losing credibility.
I would also constantly speak to lenders because things are changing all the time, especially in this environment. It’s always a reason, you know, right now making this January of ’23, and the interest rates are increasing, the property values are decreasing, so the market’s always changing. But the reality is the market’s always changing, whether it be in ’23, ’22, ’21. I started, um, in this 35, 37 years ago. Every year, the market’s changing. So what I would do is I would speak to your lenders once a month, once every other month, speak to them for 15 minutes, 10 minutes. Hey, what do you guys see in the marketplace? What kind of deals are you doing today? What aren’t you doing today? Because what they were doing six months ago and what they were doing today could be two different rel two different things. They could be the pricing could change. They could go from an expensive lender to an inexpensive lender. There’s all these variables. So take that again.
Really, the common theme that I’m saying here is take the time, invest the time. It’s going to be your best investment. Invest the time to learn and to package deals correctly and to prepare. Apologize, prepare as best you can set yourself up for success. Don’t end the borrower. Remember, you’re working on behalf of the borrower. Set yourself and set the borrower up for success, not for failure or mediocrity. And the more you put in, the more you’ll get back. That I can tell you, and that I’m 100% sure. The more time you put in and the more effort and the more energy and the more knowledge you accumulate, you will do better. So don’t look to take shortcuts. Again, I don’t feel like I’m beating up on brokers. That’s not my purpose. 90% of the brokers are fantastic out there, but I do see a lot of new brokers coming into the industry, always coming into the industry, and I see them making the same mistake.
So, I’m really making it for those brokers. Should do that anyway; we’re Gelt Financial. We’re a private, non-bank lender. We do loans and JV Equity from a hundred thousand to three million. We do bigger; well, we just closed a deal a couple weeks ago for 4.6 million. But we’re not doing the real big stuff. We’re generally, um, private portfolio collateral-based lenders. We’re really not focused on the borrower’s credit or the borrower that much. We’re really focused on the property, hyper-focused on the property, which allows us to do a lot of things. We generally don’t do appraisals; loans are closing, um, literally within days or a week. Um, you know, we say we’re the home of the 10-day lender, and it’s probably less than that. But we’d love to work with you, and we self-understood love working with mortgage brokers. We love mortgage brokers. I, you know, I started out in the Residential Mortgage business, um, when I was very young, the LMO about 40 years ago, and it’s been fantastic, and I love everyone in the mortgage business. They’re a great breed of people, um, and I want to help them. And I’m really making this to help them anywhere. Subscribe to our Channel, leave comments, questions, and we’ll be answering them. And if you found this helpful, you know, we make periodic videos that we post on different tips. Some of them are much more extensive and not off the cuff. And I didn’t mean to offend any mortgage broker. I apologize if I did. That’s not my purpose. My purpose is to help you and elevate you and help you make more money. Thank you and have a fantastic day. And check us out at geltfinancial.com.”