Understand the myths of commercial financing and find out what it takes to master this part of financing that most mortgage brokers are afraid of doing.

1. Financing Possibilities
Commercial
Financing
Mastery 101

3. • Round of Introduction, what is your
expectation?
• What do you know about commercial
financing?
• Why do mortgage brokers avoid it?
• Carrot & the stick – Why I do it

4. What Do You Think Commercial Financing Is?
Anything that does not qualify in residential
financing!

5. Business Financing
Commercial
Property
MUR , Non Profit
Agri/Farms
• Unsecured Business Financing
• Commercial Property Financing
– Retail, Industrial, Office, Hospitality
• MUR, Apartment, SRO, Non Profit
• Farms / Agricultural
• Other: hotels, pubs, recreational,
trailer park, storage facility

6. • Large Equipment & Vehicle
• Non-Branded Business
• Farm/Agricultural, Land
• Pub/Bars, Recreational & Other
• Developments (multi-properties)
Has Potential (20%)
1. Office, Retail, Industrial, Hospitality
2. Residential, Construction, Mezz
3. Multi-unit rentals, Student Housing
4. Co-op, Non Profit, Hotels
5. Branded business (Franchise)
Effective Use of Time (80%)

7. Up to *75% Loan to Value
Appraisal - in-depth (cost/income,
time sensitive, expensive)
Debt servicing calculations
Income: property & business –
terms/vacancy
Credit rating – personal/company
Business plan/experience
Up to 95% Loan to Value
Appraisal not always required
Debt servicing calculations
Income: personal employment &
miscellaneous, suite rental
Credit rating - personal
Character of applicant
* MUR CMHC Financing up to 85% LTV

8. • What opportunities, type of
commercial business to target?
1.
2.
3.
4.
5.
• Who do you know that have a
business?
1.
2.
3.
4.
5.
Make a List of Potential Opportunities

9.  Not advertised – based on risk & property
 “A” business is 1%-2% higher (CMHC lower)
 Amortizations up to 25 years (Avg. 20)
 Lender fee of 0.25 to 2% (Avg. 0.50)
 Annual and renewal fees (ie. $250-500)

10.  Application fee + broker fee
 Legal fees – higher than residential
 Appraisal fees – Cost 10+ times more than
residential (take 2-3 weeks)
 Environmental assessment (Stage 1-3)
 Survey may be required
Property Transfer Tax (No exemption)

11.  Much longer process (2-12+ months)
 Reports can take up to 6-8 weeks
 Extensive documents required
 Longer time required for analysis
 4-6 weeks for realtor subject removals
 Property Transfer Tax (No exemption)

12. Commercial qualifications are “truly” common sense
 CMHC Multi-Unit Financing better than residential rates (1.77% -
5 years/ 2.43 – 10 years term)
 Flexible down payment source and no 30/90 days requirement
for deposit
 Residential tenancy law vs business (hello bailiff!)

13. • Business owner complaining
about increasing lease yearly
• Investor worried about grow-
op tenants / druglab
• Not interested in bidding wars
• Prefers stability, conservative
investor mentality
• Investor that don’t want to
manage any more deadbeat
tenants
• Investor getting close to
retirement
• Having hard time qualifying on
anymore properties
Refer to Previous List:
Who Do You Know That Would Be Better Off
Investing in Commercial Properties?

14.  Broker reviews file, prepares a detailed
executive summary for potential lender
 Research appropriate lenders
 Lender interested will provide “letter of
discussion”
 Broker negotiate rates, fees and terms
 Collect non-refundable commitment fee
Arranges appraisal, lawyer for conveyance
 Legal work completion 1-2 weeks after
instructed to lawyers

15. • After $960K Combined:
• 1st Mortgage $ 4,972
• Tax $1200/mo
• Total $6,172
• Gross income $12,375/mo
• Gross net: $6,203/mo
• Jan 2012 - $9,600 fee
Before $960K Mortgages:
• 1st Mrtg $5,760 /mo
• 2nd Mrtg $1,625/mo
• Tax $1200/mo
• Total $8,585
• Gross income $12,375/mo
• Gross net: $3,790/mo
Same Lender

16. Negotiated Proposal:
• 100% purchase financing –
inter-alia 2 properties
• 65% cost to build financing
• $2.6M (1.6M + 1M)
• 2 months to complete
• $26K broker fee
Applicant:
• $18K & $22K net income
• Developers - 5 previous homes
• Own 2 with ~50% Equity
• 1 Home 2 months to complete
• $1.6M Purchase, subdivide +
build

17. Negotiated Proposal:
• $340K pay off all loans and all
credit cards (maxed)
• $100K additional biz LOC
• Referring broker is paid $2720
instead of $850 (head office)
• Referring broker earns 3X more
Applicant:
• RBC loan on warehouse
• Calling the loan – late payment
• Plumbing business
• Lost money 3 years in a row
• Signed near $1M projects need
additional $100K+ on top
3.10% - 3 yrs / 3.35% – 5 yrs

20. Loan Request: $340K plus additional $100-200K
These clients are in their 2nd full year of business in their new company (although they have been running their parent's business for the past 9+ years).
Bill Smith & Jane Doe are 30 year veteran plumbers. They currently operate their business out of the building they own (at 12345 Main St) which is worth approximately
$450,000. Bill & Jane worked for the family's plumbing business ABC Enterprises which was started by their parents which has been replaced by XYZ Group (2013). ABC
Enterprises has now closed their business in 2014 and referred all their clients to Paul & Peter's new company, XYZ Group Ltd.
Purpose of loan:
Part 1 - Payout RBC mortgage $200K + 100K HELOC. Also consolidate business credit card debts of approx $40K.
Part 2 - Request of additional $100-200K funds for mezzanine and business expansion. Funds would be used to build/expand office in their building. The additional funds
will also allow them to bid on more projects as well as hiring more trade personnel. This will increase their capacity to successfully bid on more projects.
Clients: Bill Smith beacon: 686 / Jane Doe beacon: 721
Both applicants have good credit history. The few late payments are due to the trade that they're in, using up their credit cards and paying them off but forget to do it now
and then. Although, they have never made any missed payments on their mortgages.
Bill Smith has $55K+ liquid investments. Jane Doe has over $115K in liquid investments.
Financials: XYZ Group's first year 2013 had $132K in revenue in the 4 short months (from Sept - Dec 31, 2013). XYZ Group has over $680K in current projects and over
$1.8M in the pipeline.
Current projects:
- Warehouse in langley, $130,000 / Duplex in North Vancouver, $30,000 / Lane house in North Vancouver, $12,000 / 38 units in East Vancouver, $511,000
Projects in pipeline:
- 5 more lane homes Surrey/Langley, $1.8M development projects currently under negotiations with project managers. (see attachment)
Challenge:
XYZ Group Ltd was incorporated in August 2013. They have actively done business in the past 16 months under this company. 2014 financials are not completed
yet. Interim financials have been requested. We can discuss further base on those financials. Clients have told me that their 2015 projections are very positive.
I believe the part 1 of the financing should be inline with your lending guidelines, part 2 should be possible if you normalized the 2014 financials and the strength of the
business moving forward. The interim financials plus new projects being added would support at least $100K+

23. Financing Comparison Broker Bank
Comprehensive
interview
X ~
Expert advice (SP/P/Ltd) X ~
Aggressive pricing X
Consulting and business
planning
X
Research Service X X
Market reports X X
Access expert network X ~
Compare costs of your service
with one or more competitors.
Point out financial benefits to
the customer and your value.
Continue to add value after the
loan – an account mentality.
Reinvest in client appreciation =
unlimited referrals

25. • Clients’ Point of View:
 limited choices & public awareness
 no rate advertisement
• Limited Representation by Brokers:
 DLC Commercial, MAC Commercial, VERICO Commercial etc.
• 25 BPS Referral fee only
• No training system to teach you
 Now is the time:
• to identify your target market / niche
• to understand how to best brand and position yourself
• to identify competitors and leverage their success
 Consider ongoing support to help you respond to changes in your market.

26.  Find a mentor
 Co-broker with commercial mortgage broker
 Start small and simple
 Be prepared to do more work
 Be prepared to be paid a lot more!

27. MLab
Intranet
Meetup
Groups
Social
Media
Experts
Hippo
Stream
Client
Tracking
Leverage
Ideas
Sharing
Content
Your
Brand
Your
Market
Your
Events
Your
Expertise

28. • Change Clients’ Point of View to:
 Unlimited choices & promote public awareness
 Stay current on market rates/pricing
• Limited Representation by Brokers:
 DLC, MAC, VERICO, Invis: independent agents to 50+% fully competent!
• Charge 150-200 BPS yourself!
• Become the Superstar trainer for your office!
 Now is the time:
• to expose yourself to your target market / niche
• to go brand yourself and position yourself
• to befriend competitors and leverage them to help each other succeed!
 Enroll for ongoing support to help you stay focus, be accountable and stay on top
of your game!

29.  “You’re either growing or dying”, choose to grow
 Key Benefits of Continuing Mentorship:
 Investment in your training is an investment in
your future success!
 Know yourself better
 Know your customer better
 Know your competition better
 Timing is everything, now is the perfect time
 G.O.Y.A.

30. Commercial Financing Superstar
This workshop will cover major components
of the Commercial Financing Mastery Level 2
workshop plus the following advanced
training:
• Contrarian lead generation strategies
• Niche marketing strategies
• Creating ambassadors & promo partners
• Mastering the art of structuring deals
• Orchestrating your brand
• Accountability support group
Recommended for brokers with 2+ years of
experience who is looking for additional
income streams.
Mentorship enrollment
application
Commitment – 3 or 6 months
Cost
 What is ROI?
 What is the cost of not
doing anything?
 6 Months 100% Satisfaction
Guarantee

31. Contact Information
Sua Truong
(604) 726-7878
Linkedin.com/in/SuaTruong
Twitter.com/BrokerWithSoul
Facebook.com/SuaTruong
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