Deal Breakdown: How a Broker Should Analyze & Win a Commercial Financing Opportunity

Written By Jey Arul

Most residential brokers freeze up when a commercial opportunity lands on their desk. They worry they don’t know enough. Or worse — they pass the lead to a “commercial guy” and kiss that commission goodbye.

Not today.

This breakdown shows exactly how a broker should analyze a real commercial deal and present it to lenders with confidence — even if they’re new to the scene.

The Scenario

Asset Type: Retail Strip Mall
Location: Edmonton, AB
Purchase Price: $3,500,000
Gross Rent: $350,000/year
Operating Expenses: $110,000/year
Vacancy Allowance: 5%
Buyer Profile: Active investor with 2 other small commercial assets, net worth ~$2.2M
Ask: 75% LTV acquisition financing

This is exactly the type of “hidden gem” deal many brokers already see — small-balance commercial, local market, strong sponsor.

Step 1 — Underwrite the Deal (Fast + Clean)

Quick math a lender will actually respect:

Gross Rent: $350,000
– Expense Recovery (Vacancy 5%): $332,500 Effective Gross Income (EGI)
– Operating Expenses: $110,000

✅ Net Operating Income (NOI): $222,500

Target Loan: $2,625,000 (75% of $3.5M)

Assume 6.00% interest
25-yr amortization
→ Annual Debt Service ≈ $202,000

DSCR: $222,500 ÷ $202,000 = 1.10x

👉 Translation: Just squeaks by most lender minimums (1.10–1.20x depending on asset + tenant quality).

✅ It can work
⚠️ But there’s zero wiggle room

And lenders hate zero wiggle room.

Step 2 — Identify the Red Flags Early (So You Look Like a Pro)

Risk Why Lenders Care Broker Move

Low DSCR Any drop in occupancy = trouble Show upside + tenant strength

Tenant Mix If too many “mom & pops,” higher risk Provide business summaries + lease review

Sponsor Liquidity Down payment + reserve strength required Package PFS + corporate structure details

Lease Expiry Clusters Cash flow risk on rollover Provide a lease maturity schedule

Your job isn’t to ignore the red flags — it’s to prove you’ve already mitigated them.

Step 3 — Position the Deal for Approval

Here’s how to frame the story:

Thesis:
Neighbourhood retail has been the comeback kid since 2022 — service-based tenants stick, and people still need in-person food & daily needs.

Stability Proof Points:
✅ 94% leased
✅ Anchored by a well-known local grocer
✅ Average remaining term: 4.8 years
✅ Recent rent renewals tracking upward

Upside Narrative:

  • Two units rolling in 18 months already receiving higher rent interest

  • Market cap rates tightening = future refinance potential

Call it what it is:
Low-risk, bread-and-butter Alberta retail play.

Step 4 — Build a Lending Strategy (Don’t Shop Blindly)

Target lenders by reality:

Lender Type Best Fit For Expected Terms

Credit Unions Local retail, story-based approvals 65–75% LTV, 5.8–6.4%, 25-yr Am

Alt Commercial Lenders If DSCR doesn’t cut it 70–80% LTV, higher rate, interest-only options

Schedule A Banks If sponsor is a unicorn Tough… likely heavily haircut loan

Recommended approach:
Lead with a Credit Union. Keep Alt lender warming up in the bullpen.

This is how you control the lender narrative instead of reacting like a rookie.

Step 5 — Package the Deal Like a Weapon

What lenders want in their inbox:

✅ Executive Summary (1-page)
✅ Rent Roll + 3 Years Operating Statements
✅ Estoppel Certificates (or at least lease abstracts)
✅ Environmental Phase I (if not, order)
✅ Appraisal (quote + timeline)
✅ Sponsor Net Worth + Global Cash Flow
✅ Photos, site map, aerials

If you look organized — they assume the deal is solid.

Broker Win: Commission Outlook

Loan size: $2,625,000
Typical commission: 100–150 bps

→ $26,250 to $39,375

Not bad for a broker most people count out as a “resi-only” player.

Bottom Line

Brokers already sit on commercial gold hiding in their database.

You don’t need to be born into Bay Street underwriting.

You just need:
✔ A simple underwriting process
✔ A killer lender narrative
✔ The confidence to quarterback the deal

The deals are there. The money is real. And the upside? Massive.

This is where you stop being “just” a resi broker — and start becoming the broker investors call first.

Download the Package

To help you win deals like this one, members get:

📌 Commercial Deal Intake Form
📌 Underwriting Calculator
📌 One-Page Lender Summary Template
📌 Broker Risk Mitigation Checklist

🔗 Access these tools in the Resource Library (Members Only)
(If you're not yet a member — seriously, what are you waiting for?)

Jey Arul

I help residential mortgage brokers confidently transition into commercial financing — turning uncertainty into opportunity in one of the most lucrative segments of the finance industry.

With over 20 years of direct experience in commercial real estate, business financing, and M&A advisory, I’ve structured, negotiated, and closed dozens of commercial deals across Alberta. Today, I draw on that experience to coach and mentor mortgage professionals through the entire commercial deal lifecycle — from lead generation and client discovery to lender negotiation and professional loan proposal writing.

I combine real-world experience with a strategic lens, helping brokers not only learn the mechanics of commercial finance — but also how to build sustainable deal flow, attract quality clients, and present themselves credibly to lenders and investors.

If you're a mortgage broker looking to grow beyond residential lending — or a financial professional exploring commercial finance as your next chapter — let’s connect.

https://www.ajscoaching.com
Next

From Introducer to Rainmaker: How Residential Brokers Can Systematize Commercial Deal Flow