Low-cost commission advance firm Middlegate Funding launched operations in the New York City market on Jan. 15, offering up the firm’s services to Big Apple brokers for the first time.
Located at 317 Madison Avenue, near Grand Central Terminal, Middlegate offers brokers cash advances on deals that are in contract but have not yet closed, and in which cash hasn’t yet changed hands. The firm promotes itself as a low-cost alternative to competitors such as eCommission and Commission Express, and has served the entire U.S., minus New York City, since the summer.
Most of Middlegate’s activity until now was in California, Florida, Texas, Arizona and the lower Mid-Atlantic Coast, founder Ashley Joffe told The Real Deal. Because the New York market is unique, Joffe said, the firm wanted to work out the kinks in other states before coming here.
“This is what we think will be our major market, and we wanted to perfect and hone the product before starting operations here,” Joffe said. “Here there are certain specialties of asset types, and the brokerage community here is much more sophisticated.” And with $2 million to $4 million price tags common, a bit of financial preparedness was in order as well.
Joffe, an accountant by training, first worked in New York real estate on the finance and operations side in the 1980s. He launched his career in 1988 at East River Management, where he managed real estate portfolios of wealthy New York families, and became director of financial investor services with Insignia Financial when the company absorbed East River in 1995. One year later, he went to global financial management consulting firm Stern Stewart, then joined boutique real estate investment firm Ark Equities as a principal in 2006.
Throughout his career, he told The Real Deal, he interacted with brokers who needed working capital.
“Agents and brokers are not salaried. They have peaks and valleys in income and cash flow, and in order to continue or maintain building business, they need cash flow,” Joffe said. “I realized that very quickly. So I started to investigate, and from there realized there was a great niche for this particular product.”