1 Mike Chiu

MIKE CHIU
Capital West Mortgage

Exceed the client’s expectations

Years as a commercial broker: 16
Loans closed in 2014: 16
Location: Vancouver
Amount funded in 2014: $224,663,000

CMP: When did you first get into commercial mortgages?

I started in commercial mortgage brokerage in 1999, straight out of university. I had a few friends who were active in this space, and I liked the opportunity to work hard and get ahead in the business world. Additionally, the complexity and constant challenge of projects in the commercial space has provided for a challenging and interesting career. The first three years were a real grind until I finally got some traction in the industry. 

CMP: How can commercial brokers excel in today’s market?

Commercial brokerage is a very competitive industry. Not only are you competing against other brokers, but you are competing against banks, credit unions, life companies, pension funds and private lenders who are aggressively seeking direct lending business. Beyond that, most lenders do not pay your fee, so you need to justify getting paid directly by the client. It all comes down to client relationships, structuring the deal properly and attracting the best sources of capital. If you can demonstrate the savings to the client while stream-lining their access to capital, you can count on continued business from that client. 

CMP: What’s the most important thing when it comes to building a successful business?

I view client satisfaction as my main goal, not closing deals or getting paid. If you can exceed the client’s expectations and establish a relationship, the deal flow will follow. The majority of my business is repeat customers, and this is based on client satisfaction and building a relationship. I also add a tremendous amount of value for my clients beyond sourcing debt. I can produce cash-flow models for construction and lease-up, review and develop construction budgets, and proofread income and expense models, to name a few. These are value-added services at no additional cost to the client, which also protect the client from potential financial hardship with overly aggressive pro forma budgets.   

CMP: How do you bring in new business?

I am very specialized in seniors’ housing, and many industry-related professionals refer business to me based on my success in this sector. I regularly speak at two annual industry conferences on the topic of financing seniors’ housing. These public engagements have always proven successful in garnering new business and industry exposure. I have also co-brokered with other brokers who have clients looking to finance a seniors’ property. With nearly a quarter billion funded last year, this allows the client the best access to capital, and everybody wins. 

CMP: What’s the most important thing a commercial broker can do to grow his or her business?

You have to be comfortable with cold- calling. No matter how busy I get, I always take time out of the week to get in front of new potential clients and ask for their business. 

Many of my clients have grown to a significant size over the years and have retired and sold their portfolios. It’s important to continue to build a pipeline of new business, while fostering the growth of your existing clients. 

CMP: What trends have you noticed this year? Have you had to adapt your strategies to market conditions?

There is a lot of passive equity flowing up from the US, which has been driving values of properties in the seniors’ housing sector. With so much competition for stabilized properties, I suspect we will continue to see downward pressure on cap rates in the last two quarters of 2015. Lenders continue to have significant amounts of liquidity, and we have seen tremendous competition for AAA deals, with new bench-marks in spreads. 

With the yield curve being as flat as it is, I have noticed clients looking for longer-term deals, and have funded term loans of 10 to 20 years. Just last week, I locked in a 2.70% rate for 10 years. 

CMP: What advice would you give to brokers who are thinking of entering the commercial space?

In my opinion, commercial mortgage broker- age is not an industry that can be dabbled in if you want to excel. If this is the direction you want to take your business, you need to focus on understanding the detailed under-writing of commercial assets, and work with a team that has a very good network of commercial lenders. I came to this industry with a master’s in health services administration, which I used as a springboard to focusing on seniors’ housing. I would suggest specializing in a market or product type, and become an expert in that industry. If you can be the best in your specific field, whether it’s apartments or shopping centres, the clients and deals will come to you.

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