Let me give you a very recent example of a typical conversation that I had with someone referred over to me. The client had a need to pull a small amount of cash out of a commercial building they occupied. The residential lender that they had worked with for years felt the client would be better served with my involvement.
First, the clients were very nice; and they mentioned that they had done a lot of loans through the years with this loan officer. They misunderstood the email introduction; as they thought their loan officer did not want to do the loan due to its small size. I explained that I was brought in as the LO did not feel it was his expertise; and that he wanted what was best for his clients. They seemed fine with the explanation.
I quickly determined that the loan was too small for me to work on. However, I still wanted to help them understand an optimal approach. After all, I want my virtual partner to feel I was helpful (otherwise, future referrals would be at risk).
I asked a lot of questions to see what was important to the clients. About 10 minutes into the conversation, the client brought his wife on the phone as well. Now I knew I must have a hit a nerve with some of my questions. Not in a bad way, though. They just needed some guidance as they had accumulated a lot of properties through the years; and their financial advisers had not really explained to them their options as the years rolled on.
This is why the wife jumped on the phone. They were starting to better understand how they could set a strategy in place that met their long-term objectives. Now these are different for every client. Hence, why it is important to find that virtual partner that has the skill to help the clients develop a strategy that works for them.
Clients, we sometimes forget, are not engaged in real estate 24 by 7 typically. And, trying to understand all the options with taxes, investing, etc. can be extremely difficult. They want a road map that is often left up to them to figure out. I enlightened them on a lot of things (from how to do a 1031 exchange on their own residence to where I would pull cash out of if I was in their situation).
It was a lengthy conversation. I asked that they confirm the advice I gave with their CPA (since I am just a strategic commercial mortgage broker). I also sent them back to their LO as they owned other properties that had no debt. That was where it made more sense to pull the cash out they desired. It was the most cost-effective solution.
I share all of this as these clients were grateful. Now, did I get paid? Nope. However, I am suggesting that this type of service benefits all. These clients will most likely circle back when they have a need in the commercial space. I suspect they will also have others they know in need of similar advice contact me. Finally, the LO that sent them should end up benefitting by writing more business. To me, everyone wins.
For those of us associated in the real estate industry, what we do matters greatly. Whether you are helping someone get their first home or referring someone to create a long-term strategy that allows creation of legacy wealth, it all is important. We can make a huge impact on individuals and families.
I suggest remembering what it was like for you when you bought your first home. That is a big deal. Often, many forget the positive impact we can have on others. Our efforts should not be taken lightly; and our experience is often minimized until we (either directly or indirectly) take the time to provide a path for clients to reach their ultimate goals.
Should you want to discuss this overall approach, feel free to give me a call.
Class A Office Building Needed ($10MM – $50MM):
Location: Palo Alto, Los Altos, Mountain View, Cupertino, Santa Clara or Sunnyvale.
Client is less concerned with Cap Rate versus location and quality. If you have anything, then please send me the details. If warranted, a connection will be made with the Broker.
Investments Opportunities for Purchase with Strong Cash Flow:
If you assume investors in the Bay Area are getting a cash flow of 3.5%, then you can see the potential improvement with these properties above. This approach is great for the investors desiring increased cash flow, an opportunity to get out of daily property management, and/or taking the challenges of rent control off the table. Should you wish to discuss any of these or others, then give me a call.
That’s it for this week. As always, feel free to give me a call with any of your strategic financing needs.
Articles of Interest:
NREI shared “Should CRE Players Return to Defensive Investing?”
The SJ Mercury News shared “Map: It may take centuries to reach housing goals in Bay Area.”
|Apartments||4.385% – 4.850%||3 to 10 year (30 yr amortization)|
|Commercial||4.695% – 5.150%||3 to 10 year (25 yr amortization)|
|SBA Lending||Call for Options||Call for Options|