RAMS founder John Kinghorn is back in the mortgage business and looking to recruit franchisees for his revamped branded offering.
LJ Hooker Home Loans is looking to become a significant player in the Australian mortgage market under new ownership of John Kinghorn and former RAMS executive Paul O’Regan.
The group has been operating in the Australian mortgage market for over 10 years. Originally the home loans division of the iconic Australian real estate brand, LJ Hooker Home Loans has until now been known as a mortgage brokerage. But Kinghorn and his partners see a bigger opportunity for the brand.
Mr O’Regan told The Adviser that the revamped franchise business will be a unique offering, distributing white-label home loans through strategic partnerships with Macquarie, Advantedge and Pepper Money. The group will also look to leverage LJ Hooker’s real estate network.
“John and myself saw a huge opportunity,” Mr O’Regan said. “We’ve been looking at what will work best in terms of the real estate and home loans integration piece. I think that’s something that a lot of mortgage businesses struggle with,” he said.
“We believe we’ve got a good formula to make sure it works as best as it can. That’s about ensuring the LJ Hooker Home Loans side of the business is a ‘like-for-like’ model with the real estate franchise business.”
The new model will see branded LJ Hooker Home Loans stores covering “large territories”, or geographic areas, for marketing purposes. Mr O’Regan said the group is looking to grow to 65 franchisees throughout Australia, with each franchisee having multiple loan writers working for them to ensure maximisation of the territory and servicing of the real estate network.
“Their loan book is equivalent to a real estate business’ property management book in terms of recurring income and asset value,” he said, adding that the new business’ ties to the LJ Hooker real estate group will not be its only source of leads.
“John and I are keen on making sure this business model also stands alone,” Mr O’Regan said. “As well as real estate leads we have an opportunity in terms of starting afresh with digital lead generation. We’ll be forming a strategic partnership with CoreLogic.”
LJ Hooker Home Loans will also be processing all of its business offshore, to enable franchise owners to focus on writing business and converting leads.
“We’ve got a good source of capital sitting there to grow this business,” Mr O’Regan said. “Previously, it has been part of a real estate business and really hasn’t had a lot of capital to help it grow and develop, which we have now,” he explained.
“The old model was very much a broker model. This new model is very much a lender/funder model. We are working strategically with a number of business partners. Most of the franchise owners are coming on the journey with us at the moment. Some have preferred to stay and work in the broker space.”
Mr O’Regan confirmed that the group is working with Macquarie Bank and Advantage, with plans to secure a strategic partnership with Pepper Money in the new year. Through a range of funders, the group will only offer LJ Hooker branded mortgages.
“It is not a mortgage manager model and it is not a broker model. It is something pretty different to what is out there in the market at the moment. That’s where we think our strategic value will be,” Mr O’Regan said.
“We know that loan life has typically been a bit longer with white label products. Also from an asset value we think it will be far greater than the traditional broker model.”
The group has a $5 billion loan book and is currently in the process of recruiting new franchise owners and working with the 32 existing franchisees to transition into the evolved business.
“There are some brokers out there who have actively come to us and said that being accredited with 30 lenders but only using a few, our model makes sense to them,” Mr O’Regan said.
When it comes to the recruitment of new franchise owners, he said traditional ‘mum and dad’ mortgage brokers won’t do.
“We are looking for entrepreneurs who want to grow the business,” he said. “We know that this is a different type of model and it will take time to get the right people in the business.”
PLAN Australia will continue to provide aggregation services and CRM support to the business.
[Related: Advantedge unveils new white-label product]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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