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Bryce Holdaway

16/11/2015
Blog post by Bryce Holdaway

Who’s more important: Buyers Agent or Mortgage Broker?

So, it is always interesting when it comes to investing in property, who is actually more important? Is it the Buyers Agent or Mortgage Broker?? And of course, being a Buyers Agent, you expect me to say that Buyers Agents are so important that they couldn’t be possibly outrank by the Mortgage Broker but I think people will be surprised by my answer because I actually think that the Mortgage Broker is more important than the Buyers Agent. That is despite the fact that asset selection is so incredibly critical for property investors, I still think the Mortgage Broker triumphs them. That’s very simply because, if I’m buying a house as an owner occupier, it is essentially a game of bricks and mortar. I’m buying it for practical shelter reasons that comes from my measure of status, my measure of wealth as well as the basic needs of putting a roof over my head.

But when you are buying an investment property, it is not a game of bricks and mortar anymore. It’s actually a game of finance. It’s actually a game of being able to optimally lend to the best advantage so you can continue to buy more property and build a portfolio over time.

So ultimately, you can retire the debt and have the passive income that comes from holding these assets. So for me, it is unquestionably that the mortgage broker is more important than the buyers agent and I do that through gritted teeth given that I’m a buyers agent.

Now, I’ll use an analogy. I remember talking to an investor who is living in Sydney who had multi-million dollar property portfolio and their loan to value ratio is very low. It’s in the 40% range and they want to borrow some more money to buy more investment properties. But because they’ve stacked all of their lending with one of the four pillars lenders, that Bank saw their risk as being too high and therefore said, our policy won’t lend you anymore money despite the fact that on paper, they can get more money quite comfortably. So if they had got a mortgage broker who knew what they were talking about and had structured that correctly, they would never had been in that position. So even though the portfolio was full of really great assets that are performing really well, if they are hamstrung on finance, chances are they won’t get an optimal result. So for me, a good mortgage broker will be thinking two or three loans in advance. Whilst they are setting up this loan, they are also keeping an eye on the horizon as to what are they actually going to be doing next and the one after that because what I do right now will have an impact on those two decisions. So I always think, in terms of getting the investment property right, you got to get the strategy right then the suburb right and lastly, the property. Your mortgage broker has a handle on your level of details under your household’s roof, right down to the money you spend on the mortgage, the money you spend on food, all of those sort of things. So they really control cash flow in your house.

My conclusion is very very simple.

A mortgage broker is more important than a buyers agent but there is a footnote to that. It needs to be an investment savvy mortgage broker, not just any mortgage broker who just wants to do a transaction because if you got the strategy in place on what we actually want to do in building this property portfolio and the person knows how to build the portfolio, then the buyers agent will complement them and actually amplify the result. But without an investment savvy mortgage broker, chances are your portfolio building activities will be delayed because you don’t have optimal results. So, despite the fact that I’m a buyers agent, I think that the buyers agent versus mortgage broker or investment savvy mortgage broker trade off, I think the mortgage broker wins.

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