Brokerage - Investment Sales Broker vs Debt Broker

Hi all - wanted to get some opinions/discussion on Investment Sales brokers vs Debt brokers in Canada and the US. Pro's and Con's of each and which one you would chose directly out of school.

 
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Sales Broker - Less transaction volume, Higher Fees, longer timeline from Origination to Closing (5-9 months)

Debt Broker - Higher transaction volume, lower fees, shorter timeline from origination to closing (2-6 months), higher knowledge base barrier to entry

Example using $10M sale:

From BOV / Pitch to launching marketing to Closing transaction will take 6-9 months

Sale Fee: 3% ($300,000)

Debt broker will rep the buyer on the acquisition financing, 70% of the purchase price ($7,000,000 loan)

Debt Fee: 1% ($70,000)

Acquisition financing will take ~3 months

 

Cant speak on behalf of debt side, but being a listing broker is my dream job. It’s so fun being in control of the deal, and there is a ton of negotiation happening. Which is my favorite part. Bird dogging deals for clients is a pleasure. At my shop we have the option to throw in on deals and buy if the opportunity presents itself.

Would love to hear from a debt broker.

 

Yep - worked with an institutional IS team & now on the banking side. Tend to hear the same thing.

Debt not restricted by geography & has additional forms of comp potential outside of just the origination fee. Perm financing on vanilla assets is also 80 - 90% muscle memory & application of lender credit box vs actual problem solving. Over the long, assuming an individual applied the same amount of effort on each side of the buis, better to go debt.

 

I’m on the debt side and I really like it. For multifamily specifically, they both have positives and negatives. For the IS brokers, the positives are they are the king makers as they control market, they decide who will be awarded the deal and buyers are always kissing ass to stay on the top of their buyer list (dinners, trips, big commissions, etc). If you’re at the top, it’s a great gig. The negative is it can be a grind. I think the constant property tours would be a beating (hopefully you have analyst that can do most of these) and some markets are over saturated with way too many brokers IMO. As such, you’re constantly putting up with competition bullshitting your clients on what kind of pricing they can get. A lot of these broker teams get way too large and yes theyre doing a lot in fees, but they’re splitting the fee 5 ways after splitting it with the house. That would drive me nuts.

On the debt side, the positives are you’re not geographically constrained, you see a lot of types of deals and you get to see behind the curtain on how a lot of these deals are put together. If youre good, your clients tend to be pretty loyal and there becomes a level of comfort where they don’t want to roll the dice working with someone else. The negatives are you are not a king maker like the IS brokers are and you’re more likely to get ghosted at NMHC meetings. People often view the debt as a commodity (I don’t think it is, even if you’re doing agency) and a lot of these listing brokers will try to force buyers to use their in house debt guys (northmarq especially did this in 2021). IS brokers forcing their debt is probably the most annoying part of the business.

At the end of the day they can both be very lucrative. Idk if it’s easier to make $1MM on IS or debt. The Fannie / Freddie debt guys can also get servicing income. Not sure if this ends up being super lucrative but I’m sure it helps ride out a slow year .

 

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