Tune in to Elite Broker as Mr Lowbridge shares his thoughts on “mentor” as a buzzword, the learning curve he experienced as a new-to-industry broker, as well as how his specialisation in the investment space is enabling his investor clients to effectively replace their income through property.
In this episode, find out:
- How changes to lending are affecting clients
- Investment opportunities within the Newcastle market
- Why success in regional broking relies on the quality of relationships
James: Hello and welcome to Elite Broker, I'm your host James Mitchell, managing editor of mortgages here at The Adviser and we're joined once again by Annie Kane. How are you doing Annie?
Annie: Fine, thanks James, how are you doing?
James: I'm very good. And we've got a guest in the studio with us today, Brenden Lowbridge from Investor Loans Network. How are you doing Brenden?
Brenden: Good James, how are you?
James: Not too bad. So you were in our 30 under 30 ranking this year, or was it last year or this year?
Annie: It was 2016.
James: 2016, that's right. But over that financial year I know that you wrote total loans of just under 70 million dollars. I understand you're based in Newcastle, tell us a little bit about how you run your business and what's been happening for you at the moment.
Brenden: Yeah, so I'm based in Newcastle and I work myself and a processor Sharon, who's amazing and does a lot of really hard work. We do a high volume of applications to get to that sort of number, so it's hard work and time for both of us. We specialise in the investor space, so we've built a lot of knowledge and a lot of expertise around helping people who want to grow wealth and in time, I guess, replace their income through property.
Annie: We've seen a lot of changes in the investor space in the last year or so, especially the last six months even, with crackdowns on interest only loans, with the crackdown on investment loans generally. Have you found that that's affected your day to day work, or not at all?
Brenden: Yeah, it certainly has. We find that the demand is still there, but it's just placing a loan at the moment. So I mean if I could write probably every deal that came in at the moment, I reckon my numbers would be nearly double.
Brenden: Yeah, but it's like, I went in the office one day and I literally did seven servicing worksheets and told every customer that, unless they sold something, they were out of the game. And that was one day, so it was until one o'clock, two o'clock and literally hadn't been able to place one of the inquiries that I'd gone through. So there's a big effect for those customers, particularly who have got quite a few properties already.
James: Yeah, that's interesting. I've often wondered you know, because obviously there's so much talk about where the market's at, starting to cool in Sydney and Melbourne, all this sort of stuff, and obviously the investor-driven things. I've often wondered where you've got a certain pool of investors who might have five, ten properties, what have you, and they've got an investment strategy where they're going to sell half of them, pay down the debt on the rest and then have that passive income. I'm wondering, like you mentioned with the serviceability stuff, if they're going to have to offload some of these properties, what that might do to the market. Has that been in your thoughts at all?
Brenden: It is a little bit. I think that the investors on the whole have to be a lot more strategic than they have been, so we're finding a lot of our customers now are thinking outside the box, and we help them to a degree with that. So, finding properties that might have a dual income stream, that has a bit of return, obviously helps. Or potentially being a little bit more active and maybe doing a duplex and selling half and then reducing debt and keeping half that way, and things like that just obviously lower your debt level and improve your income, so on the whole you've got a little bit more momentum to keep moving forward.
Brenden: But yeah, look, it is definitely a case now that a lot of people have to sell to move forward, but not all of them will jump in and make that decision because they don't really have an ultimate property that they want to buy. So we find a lot of them sit on the fence and it's not until they want to buy something that they then obviously go and sell the property.
Annie: How much, obviously you folks are in the investment space, but are you doing any commercial stuff as well?
Brenden: Yes, it was a natural lead into the commercial side of the business was because a lot of our customers, like I said, are growing. And so a duplex turns into a triplex and a triplex turns into six units, and I'm fortunate enough that I do that sort of thing myself as well. I'm an avid investor and do those type of developments myself. So we just went on the journey with our customers and now our customers are growing to that sort of position and we're lucky enough to help them finance those projects as well.
Annie: So, what came first? Did you invest first and became more interested in the commercial space in terms of broking? Or were you working in that space and then decided to invest?
Brenden: Good question. I probably bought a property around the same time that I started in the industry. I loved property all through school. I actually did one year in property sales for a large developer and that was just before the GFC hit, so all the excavation equipment left the site and all the staff did as well.
Annie: Wow, yeah.
Brenden: But it was a good experience and it was a really good learning curve, but then sort of left that and thought, well I still want to be in the property industry. I didn't want to work another weekend because I'd given up all weekend activities and football and whatever else, and so basically that's how broking came about.
James: It's interesting, that development space at the moment, not so much with the big multi-units but with the smaller sized things, the six units, the smaller blocks and stuff like that. In terms of your lender panel or what's available at the moment, given that there's been so much tightening happening over the last 12, 24 months or something like that, are you using more non-bank lenders? Is it more like these private equity, non-bank hybrids that are coming through? Or are the majors still a big part of your business? What's happening?
Brenden: It's a good question. Look, for someone's who's experienced, I find that the banks are still interested to talk to them, and sometimes their experience definition can vary. That might mean how many jobs have you done, how many deals have you done with us, and that's the experience box, not how many have you done with other lenders. So sometimes they'll come in and help, but otherwise if you're a first time developer stepping into that commercial space you'd have to allow for private funding rates in your feasibility for sure.
James: So you need a bit of a track record, a bit of reputation with -
Brenden: Yeah, for sure. You need to have someone in there who's experienced and preferably has a good relationship with one of the lenders doing that type of deal, because otherwise they're just not interested to do a dry lend to someone that's going to be up and down in 18 months and then I'll never see you again. At the moment they just don't have an appetite for that sort of space. We find that anyway, but most of our stuff's under five million and that's I suppose a bit of a middle patch for them.
Annie: And in terms of actually the properties that you're working, are they all around the Newcastle area? Do you do any in Sydney proper, Sydney CBD?
Brenden: For me personally, most of our clients could be investing anywhere around New South Wales, generally. Me personally, it's around the Newcastle region, but the customers are sort of all over the place. But even now we're finding our Sydney customers now, they are looking for value in other places, so they're going into Newcastle and further up the coast. They're looking obviously in Wollongong and further out west and different areas like that to try and get a little bit more value.
Annie: Yeah, and it's lovely up there as well at the lighthouse and the beaches-
Brenden: Yes, it's beautiful.
Annie: Really lovely.
Brenden: Yes, it is good.
James: I want to just sort of go back in time a little bit, just for our listeners. In particular, you're a relatively young broker in the industry, under the age of 30. You've been broking for a number of years but go back in time … You were doing some loan processing before you actually became a broker. How did you get into the industry to start off with and how was that initial period, that processing time, how has that informed what you do now?
Brenden: I basically met my bosses back then at the gym. We had a chat about what they did. I had a bit of an understanding of finance because my Dad actually works in finance. He's got his own business but he does commercial asset finance, equipment, so I knew a little bit about it. I'd helped him a little bit, bits and pieces, but sort of didn't want to do that, to be honest, and loved property, once again. So yeah, I ran into those guys, I got talking to them. It was at a time where, obviously, I didn't have the real estate job anymore and wasn't that keen on going back into that.
And so, jumped into a processing role about the same time I started finance at uni actually, and sort of worked there and did probably four years, processing on the tools and it probably didn't suit my personality type. I was sort of a bit cagey during those years but I knew it was part of the role and one of those things I had to learn so I just gritted it out. It was at a time in Newcastle where I had lots of friends making lots of big bucks in the mines.
James: Yeah, yeah I'm sure.
Brenden: So you know, you're sort of looking at what they're earning, looking at what I was earning and you'd sometimes would second-guess it, that's for sure. But I knew that long-term it was going to pay off and it was just a matter of sticking it out until that four years was up and then I was off and out trying to get my own leads and do it as a broker.
Annie: And was that with investors or was that with a bank?
Brenden: That was actually with Jetty Finance in Toronto, so Lake Macquarie.
Annie: Oh, okay.
Brenden: So yeah, so an office in there and there was a few brokers in there, a few support staff and away we went.
Annie: So when you actually made the decision to come out on your own and start broking, did you look into finding a mentor straight away, or did that come later once you actually started?
Brenden: I actually forgot that stage, but a friend talked to me one day about it, one of my good friends, and he said, "Do you remember when you were trying to make the decision on whether you'd go to commission only?" I was worried about preserving that salary, which now you look back, the salary was so small but at the time the security of it was obviously very important with bills and everything else. And yeah look, I suppose I jumped into it, and it was difficult to begin with, very, very difficult. But I'm lucky I suppose, direct mentors, I had them in the business where I was so I could sort of ask them whatever. I watched them do what they were doing, I went to appointments with them.
So I had mentors directly there in that business. And I've also found with the Newcastle region, I think it's another benefit of being a regional broker, is that regardless of whether you're in someone's business or not, they're very, very open to assist. So I'd regularly have coffees and lunch with the best brokers in Newcastle and they were always very open, they would tell me everything. So I suppose I've been sort of blessed that I probably have had maybe five or more mentors along the way who are really top performing brokers and have taught me really lots of information.
Annie: So quite an informal relationship, so you just sort of literally, as you said, just sort of having coffees and just talking. It's not sort of a formal scenario where you're like, "Okay, we're gonna sit down and have a meeting and this is what you do."
Brenden: No, no. Yeah, yeah, it's funny like that. I think when you say to someone, "Can you be my mentor?" There's a big buzzword around mentoring, you go and say to someone, "I want you to be my mentor," and all this stuff, and I probably started doing it that way and everyone looks at you, especially some of the older guys and they think, "What's this guy talking about?"
So I dropped that word, I probably read that too many times in a book. I sort of dropped that and thought, well I'll just say, "Do you want to go to lunch?"
Brenden: And so it just started, I just shared them lunch and I obviously asked them so many questions that I'd share it at the end, because I'd said, "You've helped me so much that this is my share then." And I started doing it that way and it just created a really good relationship and a bond, moreso than they thought they had to answer so many questions.
Annie: I think that's interesting actually, because so many people I think ... you know obviously you always hear with new-to-industry broker, people coming in to industry obviously, that they're talking about finding a mentor and how they do it and it's quite a lot of pressure. I think a lot of the time it's people who are being asked to be mentors feel the same way, they're sort of like, "Oh, goodness, what is this going to entail?" And how many hours it's going take. I think if it can just be an informal relationship-
James: Just people helping people, yeah.
Annie: Yeah, and just not put a label on it. It can be positive and beneficial.
James: I think on the whole we're an industry full of really great people and we're an industry full of people people as well.
Brenden: I've been to some of the big awards, long before I was doing any volume, and picked out the broker of the year, it was Justin Doobov at the time and said, I think it's him every time but, I said to him, "Let's catch up." And so he was just open to it. Anyone is like that, I think in our industry, that I've found. I guess I'm also not really reserved to go and do that either. It's a bit uncomfortable but I guess they can only say no to you and if they do, well, you go and ask someone else.
James: That's really good. And I think the funny thing about mentoring or having that sort of relationship with someone who's not as experienced and someone who's got a wealth of knowledge is that, it's obviously beneficial for the person being mentored, but it's usually beneficial for the mentor as well, you know what I mean?
James: Just in terms of developing that relationship first off, but also having that humility, you know what I mean?
Brenden: Yeah, sure.
James: It's, I think, something which is probably not talked about enough but there's definitely experience there. Can you see yourself, do you think, in a few years’ time or whenever it might be, where you'd be in a position to have that relationship with new young brokers, or you might be already?
Brenden: Definitely, yeah. I've sort of been open to it already and had some guys come into the office and see what we do in our systems and just give them a little bit of information. I think that they probably could learn better things elsewhere. We're still growing in the industry, but I think that yeah, I'm definitely always open. And that's something I'd really like to do because it's a real passion of mine actually, because I obviously came out of uni with a finance degree and everyone wanted to go down to Sydney in the investment banking jobs, coming out of Newcastle and all the rest. At that point I was, I guess four or five years into broking and I thought, "No, I'm going to stick this out. I don't need to necessarily jump into a banking job because I've got a degree now. I'm going to stick this out." And I'm so glad I did.
And so I think there's so many people like that, not only people with degrees but I think there's a lot of people in both categories who could really benefit by entering our industry and getting the right mentoring, or training.
James: For sure.
Annie: And just in terms of actually the way you broke, broker? Broking? Broke? Just broke, the way that you broke up in -
Brenden: I was broke when I started.
Annie: Yeah. The way that you broke up in Newcastle, is it different? Do you have to explain to your colleagues in the metro areas the different challenges, or do they have preconceived ideas of what broking in a regional area would be? What were your responses?
Brenden: It's an interesting question. I think there's a bit of a misconception that in a regional area we're sort of part-time brokers, part-time time surfers or cab drivers. So there's probably a little bit of a misconception that we're out one day a week at golf and one day, we don't work Friday afternoons because that's, you know like...
Annie: Beer o'clock.
Brenden: ...beer o'clock and all that sort of thing. So I think there's a little bit of that misconception. But look, there's no question that guys who are doing volumes in regional areas are working really hard. We've got an average loan size, I think it's somewhere in between $350 and $400, probably closer to $350 than it is to $400. And so that, compared to some guys you read about in the magazines is maybe 30 per cent of what their average is. So it's a lot more volume, but at the same time you don't want to let your customer service drop, so the volume can't just mean that you pull parts out of the process either.
So look, I think there's some misconceptions about our workload, but on the whole, I think we all do a similar job. I think maybe in some regional areas, being smaller areas, it's probably more relationship driven. We get a lot client referrals through friends, their family and all the rest because it is basically very tightly knit. And so you do a good job for someone and they tell everyone and, you know, that sort of gets you going quite quickly.
Annie: So does that mean that you're more reliant on, you were mentioning that you already have a loan processor in the business, does that make you more reliant on having that extra person to do the processing so that you can focus more on the client side of things and actually just dealing with getting clients through the doors?
James: Bringing the leads in.
Brenden: Yeah definitely, definitely. That was big transition, you know, because it definitely felt like I was at a roadblock where you're doing a lot of volume, and like I said before, I'm not the best when it comes to data entry. I'm nowhere near as good as what my processor or many people that way inclined are. So I was sort of just whipping a dead horse in way, because I was trying to be better on both ends, and one side was growing, which was the business coming in, but it was the business going back out and making sure I maintain that service that was sort of lacking. So that was probably the biggest turning point really, was committing to someone full time to help me out, as well as some other great staff in the office that do a lot of good work as well, but particularly someone who does the full time processing work and handles it basically from submission through to settlement, with me just making a couple of important touch points, or there if something goes wrong.
James: How did you find the … I guess graduating to that level of being responsible for bringing in leads, you know what I mean? You've got to bring in the business. Because I can imagine in a processing role, you know, come to work, there's a pile of work there for you to do. You know what I mean? It's already there. Obviously, with a lot of brokers they're running their own business. Some are one-man bands, sole operators. They've got to go out and hunt for the business. Do you think it can start with just one client and servicing them really well, and then the word of mouth referrals grow from there? Or do you think you've got to have marketing strategies, you've got to have prospecting strategies?
Brenden: I think there definitely has to be strategies. I think organically you can grow it, as you said James, I think you can do just such a good job, like a really wow job that that person will tell three or four people. I think that's possible. I guess I've been blessed in a sense that, with Investor Lines as a national brand we do get a lot of inquiry, a lot of investment inquiry because of our expertise in what we do and because we sort of are different in the broking space. So we're lucky that that's always been a huge supplement, the lines that come in through our brand and through our position in the market.
But yeah look, that's how I started. I started having to find leads and when you get a mobile, a laptop and away you go. You've just got to learn. So I think that it's definitely a learning curve and you've just got to build a relationship first of all with your referrers, I think is important, rather than sort of going and wanting something out of it, and seeing how you can add value to them as much as you can.
James: Yeah, for sure.
Annie: I just want to touch briefly on what you said earlier about your father being in asset and equipment finance. I wonder why you discounted that as an option. Is there something about it, or was it just that you saw what he was doing and the hours maybe?
Brenden: Yes, yeah.
Annie: I just wondered what it was that made you-
Brenden: I think it's one of those things, it's one of those arrogance things maybe, or stubborn things you have as a teenager where you see your parents doing something and you think, "I want to do my own thing." part of that. But then part of, he did a lot of car stuff. It just doesn't really interest me to be honest. It's a part of what we do in finance, no doubt, and it serves a purpose but I just wasn't interested in the transaction. Very much like, I suppose, the transition between the businesses I've been at. I've seen Investor Loans opportunity as being an opportunity where I'd work with like-minded customers. So people were doing transactions I was really, really interested in and really cared about the end result and we look a lot more at just the product, we look at what their long term goals are.
So I suppose that was the driver, was that doing something I like. And yeah, definitely, seeing him work a lot of Sundays and take calls, someone calling him when they're at the dealership, you know they want the Mercedes -
James: I can imagine that would be a lot of weekend work.
Brenden: Yeah, well they want it now, you know, so it's like, "Do you want to do an application or another broker will do it." And so it's a lot of stuff like that and I just thought well, yeah, I just looked at it and thought that home loans would be better.
Annie: So no immediate plans to diversify into equipment or car finance?
Brenden: No, I'll keep letting him do those ones.
James: Flick the referrals to Dad.
Brenden: Yeah, exactly. Do that and he can give me the home loans and we'll just stick to what we're good at I think at this point.
Annie: Do you actually do that?
Brenden: We do that a bit, yeah. Well the problem is I'm always telling my customers, "Don't get a car loan," because it hurts them for their servicing, for investing.
James: Of course, yeah.
Brenden: So we sort of, you know when you need a car, you need a car, but I'm sort of an advocate for not getting car loans.
Annie: Your poor Dad.
Brenden: I know. I've probably done him out of quite a bit of income. But look, when they need one and it has to happen he gets to look at it.
Annie: And it's client first, obviously.
James: Just finally, we're almost out of time but I just want to ask you a little bit about the Newcastle area because part of what do here, we write a lot of news about the broking industry and about what mortgage brokers are doing, but also in a sort of macro sense we're looking at the property market.
Newcastle seems like one of those areas where there's a decent amount of investment going on, whether it's first time buyers or just purely people buying investment properties. What's been your experience in terms of the way the market there has played out over the last few years?
Brenden: Yeah, there's been exceptional growth. I think the last 12 months RP Data recorded stronger growth than Sydney, so there's been really good growth. There's a lot of investment, both private and public investment. We've got upgrades to the airport, we got a new law court and we've had a new university, 100 million plus. We've got a light rail that's just getting built, you can probably see 10 cranes in the sky at least at the moment with new residential buildings. There's a lot of other DA's in councils for really cool things as well.
There's a lot of infrastructure spending and a lot of job growth in around that space, and prices keep moving and I think that it's getting a lot busier as well. I haven't checked the actual numbers as far as population growth, but just driving in and out of town and to do appointments, you're noticing every couple of months that you're in the traffic a little bit longer. Yeah, it's becoming desirable for people in Sydney. I know that now, just coming down on the train today there's a lot people now that are getting on and they're commuting. So these are probably Sydney people, I think, that have migrated and enjoying the lifestyle of going to the beach without parking two kilometres away from it, and working in Sydney and still making their income here but living up the coast.
James: It's an attractive proposition.
Annie: How long is that commute? Do you think they're actually commuting every day?
Brenden: Yeah, well my girlfriend does it.
Brenden: She works near Wynyard Station, so she does it.
Annie: How long does that take?
Brenden: I think it takes here just over two hours. It was about two hours for me today.
Annie: Oh okay, it's not as long as thought it was going to be, but wow.
James: You get a lot emails done on the train.
Brenden: You can get a lot emails done, podcasts, reading, sleeping.
Annie: It's a lovely river, over the Hawkesbury River, lovely trip down.
Brenden: You just need the phone reception to work the whole way, that's the only problem. It dies for about half the trip.
Annie: It's interesting that there's people actually investing up there and then commuting in.
James: Yeah, well it's, I mean the New South Wales government just announced that they'll be scrapping the stamp duty for first home buyers for new and existing properties under $650 grand. Do you reckon that'll have some sort of inflationary impact on prices in certain areas?
Brenden: Yeah, I think it has to because you're looking now, the approval numbers for new building that's sort of starting to drop off. The developers are finding it very hard to get funding. So I think the new starts on the approved buildings aren't going to happen like they were meant to. So I think there's a lot of factors that are going to stifle supply.
A few announcements again yesterday again about how they're going to try and speed that up and so hopefully they come through as well. But I think definitely it's going to bring a lot of first home buyers back into the market, which is probably a good thing regardless, but I think they just need to try and counteract that with some real good supply measures to bring some more projects on the market.
Yeah, I think it's a really good thing. I think it's the biggest hurdle for customers. We've got a lot of customers that have no problem with serviceability but they don't have a family member that can be that security guarantor for them and they just can't came up, you know they're renting and they've got bills and they just can't come up with that big lump sum up front. I think it's the biggest hurdle at the moment for affordability for first time buyers, not the repayment.
James: Yeah, for sure. Alright, well I think that's all we've got time for this week, but it's been awesome to talk to you, Brenden.
Brenden: You too. Thanks guys, appreciate it.
James: Thanks very much for coming in.
Annie: Thanks for coming in.
Brenden: Thank you for having me.
James: No worries. We'll be back next week. We'll see you next time.