A simple referral structure with mortgage brokers could make way for a new revenue stream for property managers, but many are leaving it on the table, according to a mortgage brokerage.
Eva Loisance, principal of Finni Mortgages, knows that property management margins can be thin. However, she noted that a growing number of agencies are discovering a revenue stream that costs nothing to set up, requires no additional licensing, and compounds over time just like a rent roll.
She outlined the commercial mechanics of what she calls a shadow loan book. While many agencies have identified income-stream opportunities through this avenue, she said, most property managers are failing to take advantage of them.
Speaking to REB director and Managed co-founder Alex Whitlock in The Property Management Excellence (PMX) Podcast, Loisance explained that the model is built on a simple referral structure.
When a property manager refers an investor client to an investment-specialist mortgage broker and that client’s loan settles, the broker earns an upfront commission and an ongoing trail commission for the life of the loan. The broker shares a portion of that trail with the referring property manager.
“The way that it works is, one loan settles. We get an upfront commission, and we get a trail commission for as long as the loan does exist. This is the part where we share with the PM. This is your loan book,” Loisance said.
She drew a direct parallel to the rent roll that property managers already understand intimately.
“Your loan book is similar to a rent roll. There's a trail in commission, and then you get paid that on a monthly basis. And then that has a value as you build your loan book.”
The operational burden on the property manager is minimal. The conversation starts with something most property managers already observe: a rent increase, evidence of local market equity growth, or a lease renewal that naturally prompts a broader discussion about the owner’s position.
“It’s really easy for them to at least say something. The one we work with, I'll tell you, they were very surprised – it’s like, okay, well, it just took a phone call, it just took a name and number, and then this client is now on the second property or moving forward,” Loisance said.
She noted that the model works particularly well for property managers who already have strong, proactive relationships with their owners – the kind who call their landlords regularly and understand the performance of each property on their rent roll.
“For a lot of property managers, the relationship can very often be maintenance requests, which come via email or maybe SMS. They don’t often get on the phone. But the PMs I talk to are very dialled into my portfolio. So, they are feeding into it and helping me understand and often helping me grow.”
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