Archive for category Commercial Property

Condominiums Without Bedrooms – An Alternative to Commercial Real Estate Ownership

Have you noticed the direction that the price of vacant commercial land in Leominster and basically all over Massachusetts has been going lately? Better yet…have you seen any vacant commercial land for sale in Leominster?

There’s not much out there and what vacant land there is out there is owned by a very small group of people with pockets much deeper than you or I and there is not incentive big enough to get them to sell…

What does that mean for the small business owner that is tired of writing checks every month to their landlord and wants to get into the real estate market for themselves without having to find land and put up a building? It’s time to consider an alternative to traditional commercial real estate ownership…business condominiums. Sure you could buy an existing building but like the availability of vacant commercial land, the availability of existing free-standing commercial buildings is not much better.

There aren’t too many business condos in the area although they’re starting to catch on I think…very slowly of course. They’re out there and hopefully more are coming on the market if enough developers and land owners realize this idea is a good one and can be a very profitable one too…

A perfect example of a business condo development that you probably didn’t even know about is 54 Main St, Leominster on the corner of Main St and Merriam Ave across from the post office. This building consists of 10 or so individually owned office condominiums. Like with a free-standing building each condo has it’s own deed that can be transferred at any time, can be mortgaged, and can be foreclosed if you don’t pay your mortgage.

Unlike a free-standing building, a business condo is one individual office among many others within a condo association. They’re all under one roof so the cost to repair or replace the roof is shared by several owners, and they’re all located within one building so the maintenance on that building and the general upkeep is shared by several owners. The biggest benefit financially is that many business condos can fit on one parcel of land so the cost of that land is shared by several owners. Read the rest of this entry »

Commercial Finance Broker Commission Split – There Has To Be A Better Way

Let me paint you a picture of the perfect world. A world in which you’d have all the clients you could ever want. You’d be able to pick and choose the clients you’d work with. You don’t have to work on every loan deal that comes along just to make a buck. In this world, every loan closes, your client is happy, and you take home 100% of the commission. Did I mention they give you a referral the very next week! Don’t we wish it worked this way?

In reality, you work hard for every loan deal, and they are far from perfect. Then there’s the issue of who gets paid what out of your commission. Usually you lose money every day because of commission split, so you must charge your clients more to make up the difference. The higher fees offset the experience and knowledge a broker brings to the deal and that makes it less beneficial for a borrower to use a broker.

While there is no true “industry standard” for how commissions are split, what we know is that it is industry standard to split commission. The split may be 25%, 30%, 50%, or more. Maybe it’s a point here or a point there. The split may be with the lender, a referral agent, a brokerage house, or a number of others. When it comes right down to it, the split costs you money and therefore costs your client money. There must be a way to provide the best service with the best loan product and charge the client a reasonable fee.

What does it look like when someone takes a percentage of your commission? Most brokers know it all too well, but take a look at the table below for a look at the hard dollars lost from a potential commission split. In this example, the loan value is $1,000,000, the commission is 3%, and the split is 50%.

LOAN VALUE $1,000,000.00

ORIGINATION POINTS (3%) $30,000.00

SPLIT (50%) $15,000.00

BROKER COMMISSION $15,000.00

HARD DOLLARS LOST $15,000.00

If you didn’t have to split your commission you would have the opportunity to charge a little less commission and still make more money. That would result in a happy client and happy clients give referrals and I don’t have to tell you that referrals mean more money. On top of that, if we make it cost effective, that client may just come back to you for the refinancing and for the loan on their next property. Sounds like a win-win for everyone. Read the rest of this entry »