|It's The Relationship, Stupid
Sales calls to lenders can enhance long-term results
December 31, 2001
By GEORGE BLACKBURNE
If you want to close more commercial mortgage deals, you need to develop a warm and friendly relationship with your lender. It's critical. Why? Because every commercial mortgage deal has a flaw!
Your building is a little old. One lease expires in just two years. Your tenants aren't strong enough. Some rating agency just downgraded the debt of your anchor tenant. Retail is overbuilt in your town. There is always something to nit-pick.
In fact, commercial mortgage finance is maddening for home loan brokers. Residential mortgage bankers are used to cut and dried debt ratios and loan-to-value ratios. The decision rules are bright line tests.
Nothing could be further from the truth when it comes to commercial mortgage underwriting. Credit decisions are made seemingly on a whim. And if the lender is not your friend, the answer will be "No!".
Therefore, if you really want to close more commercial mortgage loans, you need to become buddies with your lender. So how do you do it?
Fifteen years ago I had a buddy who made $400,000 in one year brokering commercial loans to one savings and loan. Back then, $400,0000 was a lot of money. His lender used to really look forward to my buddy's visits - he would bring cocaine and several prostitutes! You won't be surprised to learn that this S&L eventually ended up in bankruptcy and my buddy is a now a drugged out street person - but for a while there he was on top of the world.
Now I am not suggesting that you bring drugs and wild ladies whenever you hand deliver a commercial loan package to a lender, but I do want you to appreciate the importance of your relationship with your lender.
If there is one cardinal rule of success, always hand carry your package to the lender. Even if the lender turns this particular deal down, you will have started to develop a relationship.
In fact, many of the cheapest and most arrogant lenders will turn down your first five loans as a matter of course. My solution was to bring them a package on five separate occasions over a short period of time. I knew this new lender wasn't going to approve any of them yet. I just considered the packages to be sacrificial maidens that had to be slaughtered on his alter. Then, after I had chatted the lender up and developed a relationship, the lender would start approving deals for me.
Man, you should have seen the doggy loans that would get approved just because they were the sixth loan and my lender was feeling guilty for turning down my previous five cherry deals!!! Woof-woof. Grrrrrr. Real dogs.
You can also take your lender out to lunch or out to play golf. Chat him up. Invite him to company parties. Take a genuine interest in his life. I consider my personal banker to be a dear friend and advisor. I consult him often.
So remember, every commercial loan has flaws. The lender has to be willing to ignore these flaws, and he will only do so if he is your buddy. It's the relationship, stupid.