Mortgage Professional: Collin Bruce
Brokerage: Dominion Lending Centre
Location: Edmonton, Alta.
Niche: Real estate investors
Canadian Mortgage Professional: How did you identify your niche?
Collin Bruce: I did some investing before brokering and was actually involved in flipping houses, because dealing with investors definitely takes a different type of broker. An investing background is definitely an asset.
CMP: What is the best way to identify a niche?
CB: I just started with people that I knew. A lot of my clients were other investors. You have to love what you do to succeed in a niche.
CMP: What are the specific demands of your niche?
CB: It's not a transactional point of view, but rather looking at where they want to be in five years and finding a way to get them there. Once you get past that fourth rental with someone, that's when you really need to be an investor broker. You need to know what order of lenders to hit, which ones are non-portfolio and which ones are.
CMP: What do you mean by non-portfolio?
CB: With some lenders even if you own four rentals with other lenders, but none of them are with that particular lender, they won't give you a loan. Portfolio lenders aren't as concerned about this.
But in terms of specific needs for investors, you also have to be able to analyze and manage their portfolio and cash flow. For a first-time homebuyer it's all about the rate, monthly payment and paying down the mortgage faster, but with investors it's all about getting the best cash flow, because you shouldn't be buying on speculation that values are going up. It's just a bonus if that does happen.
CMP: How do you educate yourself in the area of real estate investors?
CB: You need to sit down with a broker who is experienced in it, and joining an investment club like REIN (the Real Estate Investment Network) and talking to investors is great. Also, just go over different lenders' rental programs, because it's a totally different mentality with rentals. Not only are they generally the smallest part of a lenders' portfolio, but they also have the highest amount of defaults so you need to understand why lenders are so strict.
Also, keep up in the local economy, which is why a network is good to join. Just know your market and take a long-term approach, because there is a lot of short-term boom and bust.
CMP: What is the best way to successfully serve this niche?
CB: With rentals you need to set the expectation upfront and never over-promise. You might not be able to get them the loan because with a rental property it has to be totally clean, no exceptions. Lenders can always come back for more documents as well. If you are a new broker and someone comes to you with 14 rental properties, where do you even start?
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