A mortgage brokerage principal has argued that a mutual relationship between property managers and brokers could yield stronger results for investors and new revenue streams for professionals.
REB director and Managed co-founder Alex Whitlock sat down with mortgage brokerage Finni Mortgages principal Eva Loisance for The Property Management Excellence (PMX) Podcast to explore one of the most overlooked and underutilised relationships in property investing: the collaboration between mortgage brokers and property managers.
Whitlock, a seasoned property investor, said that property managers play a critical role in managing his investment properties, while mortgage brokers are “perpetual partners” who help shape his purchasing decisions and provide feedback on various aspects of his potential investments.
“They consider very clearly what the yield is going to be before we even get into taking on the loan,” Whitlock said.
“Then, the relationship with the broker finishes and the relationship with the PM begins.”
As such, Whitlock said these two professions complement each other, leaving the door open for symbiotic and fruitful collaborations.
Loisance, who specialises in managing complex investment portfolios, said that as property investors face mounting challenges, a good broker could provide valuable insights into an investment's yield before taking on a loan. Once the loan is secured, the property manager then steps in to manage the asset.
Mortgage brokers could significantly benefit from the intel that property managers offer as they work on the ground and are across the property and the market, she said.
“We do work with them a lot. We tried in the last few years to really dig into how much we can serve each other to better the outcome for the client.”
Don’t miss out on the chance to work together
One of the chief points of discussion was the often-missed opportunity for collaboration between property managers and mortgage brokers. It was noted that despite the potential for alignment between the two roles, many property managers have not proactively leveraged relationships with mortgage brokers to benefit their clients.
Whitlock said: “In 30 years of buying property, I’ve never once had any property manager come to me and say they’ve got a relationship with a mortgage broker. They’ve never asked if I would like to have a review of my situation and add to my portfolio.”
Loisance noted that it is a “shame” that collaboration is uncommon, adding that certain events should trigger a review for a client.
“For example, when you have a lease renewal, that could be the time to review your portfolio and see if you should sell, or do a rental appraisal to increase the rent,” she said.
“There are lots of events an investor goes through that could help a property manager serve them better, and the broker at the same time. But often they don’t talk to each other.”
In addition, investors may be contemplating purchasing another property, as the No Place Like Home report by non-major lender Great Southern Bank (GSB) showed. It found that 38 per cent of Australians are considering buying an investment property in the next three years, the highest proportion recorded in three years.
However, these investors might be facing cash flow constraints or ongoing maintenance costs in their current property. Loisance said that property managers could provide brokers with insights into the investor’s circumstances in their properties.
“They can tell us long in advance,” she said.
“The clients might need an equity release at this time, and property managers know the market. They would know that the property has increased in value. It might be time for them to take out $20,000 and fix the property. And then maybe it’s a good time to sell.
“As we build that relationship (which can take years), we discover that there are lots of times where property managers can feed us intel, and we can feed them intel as well about what the investor is doing. Then they might be able to find them another property or a better tenant. There’s a lot there that can happen. It often starts with a rental appraisal.”
Collaboration is quick and easy
There is also a commercial benefit to these relationships. Mortgage brokers, Loisance said, could work with property managers to create referral agreements and additional revenue streams.
“When a loan settles, we get an upfront commission, and we get a trail commission for as long as the loan exists. A part of that can be shared with the property manager who referred the client.”
The podcast highlighted how collaboration between mortgage brokers and property managers could create value for both parties while also providing holistic service to property investors and ensuring their investments are financially sound and well-managed.
“It’s not too much additional work for the PM. It just takes a phone call and a conversation for the client to move forward and maybe buy another property. It’s almost too easy not to give it a try. This relationship is very underutilised,” Loisance said.
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