What Mortgage Agents Do & How Do They Get Paid

[00:00:00] Welcome to the Canadian Real Estate Investor where hosts Daniel Foch and Nick Hill navigate

[00:00:06] the market and provide the tools and insights to build your real estate portfolio.

[00:00:12] If you follow a lot of entrepreneurship or business growth wisdom, you'll often hear

[00:00:18] the advice that you need people if you want to grow your business.

[00:00:23] Real estate investing is no different.

[00:00:26] You need a killer team of top talent if you want to have a competitive advantage

[00:00:31] as an investor in your market.

[00:00:33] The challenge is that as real estate investors, we often don't have the capital to pay salaries

[00:00:40] to a team of professionals while we're out there growing and usually bootstrapping our

[00:00:46] portfolios.

[00:00:47] However, real estate is one of the few businesses in which you can build a killer team of

[00:00:54] professionals and many of them are paid on a commission or piecework rather than

[00:00:59] a salary.

[00:01:00] They only get paid for the work that they do.

[00:01:03] One of the biggest things that we talk about in our Realist.ca course is building a power

[00:01:09] team that is a group of people who work for you to help you grow your real estate

[00:01:15] investment business and they include a realtor, a home inspector, a property manager,

[00:01:21] an accountant, a contractor.

[00:01:24] But none of these jobs or those people can be possible without money to buy a property.

[00:01:33] And where do you get money to buy a property, Nick?

[00:01:37] Well, for most people on average, 80% of that money comes in the form of a mortgage.

[00:01:43] Now, the cool part, a mortgage often comes with a power team member itself, either

[00:01:48] a mortgage agent or a mortgage broker.

[00:01:50] And that's what we're going to talk about today.

[00:01:52] And just as a side note before we begin, we are having a September free webinar on

[00:01:57] VTB mortgages September 20th at 11am.

[00:02:00] You can sign up for the webinar and join our free community at Realist.ca.

[00:02:04] Now, mortgages play a pivotal role in both personal finance and in the broader economy.

[00:02:12] These financial instruments transform home ownership dreams into reality.

[00:02:18] Shaping individual fortunes and influencing economic stability.

[00:02:22] Understanding mortgages and their complex landscape empowers people to make informed

[00:02:28] decisions that can impact their financial futures for decades.

[00:02:32] On a larger scale, mortgages are integral to national economies infecting interest rates,

[00:02:38] lending practices and market health.

[00:02:41] Now, for real estate investors, leveraging mortgages is crucial for maximizing investment.

[00:02:48] Returns and optimizing cash flow.

[00:02:51] Now, having a deep understanding of financing options through mortgages can significantly enhance

[00:02:57] investment strategies allowing you, the investor, to expand your portfolio.

[00:03:03] Mortgage brokers play a critical role by providing expert guidance and access to a wide

[00:03:09] array of financial products which can be tailored to an investor's unique needs and goals.

[00:03:14] By forming a strong relationship with knowledgeable professionals in the financial space, investors

[00:03:19] can navigate their ever-changing real estate market with more confidence.

[00:03:24] They'll have more advantageous terms and conditions available when they have a financial partner

[00:03:30] in their investment business.

[00:03:32] In this way, both mortgages and brokers are important in unlocking the full potential

[00:03:37] of real estate investments.

[00:03:40] So have you ever wondered what goes on behind the scenes when securing a mortgage?

[00:03:45] What exactly are the roles and responsibilities of a mortgage agent?

[00:03:49] And how do they secure the best deal for their clients?

[00:03:52] And can you save money by working with one?

[00:03:55] Moreover, what kind of income can a successful mortgage agent expect

[00:03:59] and what educational path is required to enter this profession?

[00:04:03] Welcome back to the Canadian Real Estate Investor Podcast

[00:04:06] and thank you for joining us today as we explore these questions

[00:04:10] and gain some insights in the vital role that mortgage agents play both in the real estate

[00:04:17] market as well as in your own personal journey as members of your power team.

[00:04:22] We'll look at their earning potential and the educational journey they embark on

[00:04:25] to become experts in their fields.

[00:04:28] So let's start by looking at the very thing getting brokered here, which is a mortgage.

[00:04:35] You mean death pledge, right?

[00:04:37] Exactly. We actually sold a few of those shirts that were ideated on this show.

[00:04:43] Yeah, maybe we should go back and provide a little context for those that haven't maybe

[00:04:47] listened to every single episode and maybe don't understand our strange inside jokes.

[00:04:53] So the word mortgage is derived from a law French term used in Britain in the Middle Ages,

[00:05:00] meaning death pledge, which refers to the pledge ending or dying when the obligation

[00:05:07] is fulfilled or the property is taken through foreclosure.

[00:05:11] Yeah, so obviously we thought that was kind of funny, so we decided to put it on a shirt

[00:05:15] as we do and sold a couple. But anyways, let's get back. I think those are still for sale on

[00:05:20] our merch store.

[00:05:21] And also worth noting, so we've been talking about this Christmas sweater party.

[00:05:26] We should let us know if this is a good idea. We're thinking we're going to do a big

[00:05:31] Christmas party for a holiday party obviously because there's a variety,

[00:05:35] not everyone just celebrates Christmas in Canada, but a big holiday party with ugly sweaters.

[00:05:42] Because we sell it, we've historically like our only merch item that actually performs

[00:05:47] is these Christmas sweaters and we've sold quite a few of them over the years.

[00:05:52] And so we want to have a big party of people, just all a bunch of people listen to the show

[00:05:58] wearing Christmas sweaters, not ours, any kind of Christmas sweaters.

[00:06:01] And we're going to host it probably in Toronto and aggregate a bunch of the meetups, etc. So

[00:06:06] if you want to go, stay tuned and let us know if this is a good idea. If it's a horrible

[00:06:10] idea, let us know. But I think it's a not a bad idea. Anyway, I digress as this tradition.

[00:06:17] So again, parties are never a bad idea, Dan. But let's get back on track here because we're not

[00:06:22] here to just talk about parties. We got to talk about mortgages. Now, let's just give a quick

[00:06:28] high level definition. Okay, mortgage is a loan used to purchase or in some cases maintain a home.

[00:06:34] That can just either be it doesn't have to be your standard residential home. That can be

[00:06:38] a mortgage on a large piece of commercial vacant land industrial property. What happens behind the

[00:06:46] scenes is nuanced but overall the borrower agrees to pay a lender over time typically in a series

[00:06:52] of regular payments divided into principal and interest. The property then serves as collateral

[00:06:57] to cure that loan. So mortgages can get quite complicated, but in the end, it's one person

[00:07:03] paying another person back for a piece of something over a long period of time. And

[00:07:08] we've done full episodes on fixed and variable and principal and interest and amortization. So

[00:07:13] go back and listen to those. This is specifically about being a mortgage broker.

[00:07:19] And those loans get brokered and brokering is simply arranging a deal or agreement between

[00:07:24] two or more groups in this case, the lender and the person who takes a loan from them,

[00:07:28] sometimes known as the mortgager or mortgagee.

[00:07:32] So let's look at the mortgage or which is the person or entity who borrows and pays back a mortgage

[00:07:39] loan. Now if you're getting a mortgage to buy a home, you're the mortgage or the mortgagee

[00:07:46] is the lender such as a bank. Now the mortgage or is the person or entity who borrows and pays

[00:07:52] back that loan. The mortgagee is the lender such as a bank and the mortgage broker is the

[00:07:58] person who brokers that deal between those two brokers, that deal, that relationship, that contract.

[00:08:05] So let's look at what mortgage brokers do. And when I look at Nick's calendar, I think he just

[00:08:12] plays golf, but just kidding. That is unfair. I've been out for like three rounds this year.

[00:08:18] Not a good joke. So the first thing they would do is they would assess your finances.

[00:08:23] Finances, sorry. So how much money you make, your income, credit history and the current

[00:08:27] lending environment to determine how much mortgage you can afford. So they help you

[00:08:33] create an affordability thing. One of the first steps that we go through when we're working with

[00:08:36] students is let's actually figure out what a lender would even give you to see if you can

[00:08:42] buy something with just debt rather than having to bring in an equity partner or

[00:08:47] private lending or whatever. This is a super important resource for investors and super

[00:08:56] common for first time home buyers and second home buyers, etc. because they need to set

[00:09:01] expectations and they need to come up with a budget. And a lot of people's expectations

[00:09:05] don't always align with reality. A lot of people start, they go into a mortgage calculator and

[00:09:11] they punch in a bunch of numbers and they're like, oh, my income's this. So I feel like

[00:09:14] I can afford 10 grand a month in mortgage payments and then they go and shop as if that's what

[00:09:19] they're... The bank also agrees with them that they can afford 10,000 in mortgage payments. And

[00:09:24] then they are very disappointed when they realize that the bank does not feel that they can afford

[00:09:30] $10,000 in mortgage payments just because they can. And so this is especially important when

[00:09:36] somebody's trying to make a second or third purchase and are trying to build an acquisition

[00:09:39] strategy or portfolio. Yeah, I just want to zoom in on one word there, Dan, expectations.

[00:09:46] So I think that is something that mortgage brokers and agents just help with so well right off the

[00:09:50] bat. You know as a real estate broker, as a realtor dealing with a client with unrealistic

[00:09:58] expectations that doesn't have their financing strategy figured out is a complete waste of time.

[00:10:04] And unfortunately we see that a lot. And a lot of these posted rates or

[00:10:07] calculators online are almost used as lead magnets and incentives to really get people in

[00:10:13] instead of actually provide a ton of value. Right? Let's look at one of the other main things that

[00:10:21] brokers do for their clients. And that is comparing and understanding the actual mortgage products

[00:10:28] themselves. Right? So reviewing current mortgage rates can be like finding a credit card that

[00:10:36] works really well for you. Ideally, you want to shop around and do some thoughtful comparisons,

[00:10:40] right? Do I want points? Do I want money back cashback on groceries? But you might not have the

[00:10:45] time or the energy or the mental capacity to figure out what is the right credit card. So

[00:10:49] you just kind of default, right? Now we're going back to the choice paradox.

[00:10:53] Mortgage brokers take care of these comparisons on tough financial products for you.

[00:10:59] Right? So what we do is I'm going to default to say we sometimes Dan is because I am a

[00:11:05] mortgage broker myself is I'll weigh the options from such like the big six banks, RBC, TD.

[00:11:13] We'll go look at all lenders, even B lenders, even private lenders. And a broker will then go and

[00:11:17] explain these different products to you and understand how much each one of them will cost

[00:11:25] overall upfront on a biweekly or monthly basis. And then of course after you have chosen

[00:11:30] the loan, your most comfortable with your broker will start to collect documents, package your file

[00:11:36] together and submit your mortgage application to what they would consider them. What they've

[00:11:43] told you is the most appropriate lender or lenders. Another good thing a mortgage broker will do is

[00:11:49] they'll sort of serve as an advocate for you, especially when talking to lenders who may

[00:11:55] have doubts or questions about funding your mortgage. Brokers often provide more information

[00:12:02] or context or urgency to a lender's underwriter to either take another look at the numbers or

[00:12:10] request an exemption or explain the full story of your finances or financial stability.

[00:12:15] And these are numbers that just can't really be told only in data or numbers that are

[00:12:21] submitted in an application. Yeah, exactly. Sometimes there's a lot more to that story than

[00:12:27] just the numbers. You can be like, okay, yes, this person missed their credit card payment,

[00:12:33] but it was their first, it was the capital one card that they took with a $300 limit that they

[00:12:38] thought they had paid off and then one little thing went on it and they messed up the credit

[00:12:41] and they have a missed payment on it. But other than that, this person makes this amount of

[00:12:45] money a year, et cetera, et cetera. Some things, it's cut and dry a little bit,

[00:12:50] but if you have an advocate there, that person, that power team member that can go in

[00:12:54] that has those good relationships with the lenders can go in and say, look,

[00:12:59] look at this client, they're completely fine. This is why they missed that one payment

[00:13:03] and provide an explanation for it. So that's another thing they can do. They can take that

[00:13:08] kind of stuff and they can use it to negotiate on your behalf with potential lenders and

[00:13:14] they can do that and try to get more suitable terms, lower interest rates. Now, this isn't

[00:13:19] always possible, right? Getting lower, better terms or lower interest rates, but it's something that

[00:13:23] you should be asking and that your broker should just do on your behalf regardless.

[00:13:28] Now again, that negotiation can be for a better rate, a different type of product or an additional

[00:13:33] product to whatever thing you're looking at, term length conditions. And finally,

[00:13:38] just any good power team member, just as any good power team member, they should be an expert

[00:13:44] not only in their area of expertise, but in your corner as well. They should have an

[00:13:49] understanding of your investment thesis and a strategy that you've built out with them on how

[00:13:54] to get there. So now that we kind of generally provided what a mortgage is and what a broker

[00:14:00] agent does with them, how does somebody become a mortgage broker and why might they do that?

[00:14:06] Yeah, the how is actually a lot simpler than the why. So let's maybe start with

[00:14:13] the why. Now, I can speak for myself and some of my industry peers who I've spoken with.

[00:14:18] Here are some of the common themes, Dan, that I've gathered as to why people gravitate to this career.

[00:14:25] It's, I think one of the first ones is that it's considered to be lucrative, right? There's

[00:14:30] a chance to make doctor level money. Now, most people don't. It has that Pareto distribution,

[00:14:37] right? Kind of like an 80-20 or it would be probably even more extreme than like a 90-10

[00:14:42] distribution. So 10% of the people make 90% of the money and 90% of the people make 10% of the money.

[00:14:47] They're very similar to realtors, but the opportunity is there.

[00:14:51] Yeah, that's exactly it. The next piece here, there's a big one for me as well is freedom,

[00:14:56] right? Unlike many other careers, mortgage brokers and mortgage agents can pretty much

[00:15:01] work from anywhere. Dan, I mean, we've been in a mortgage business for years and I've closed

[00:15:06] deals on vacation at the cottage. The difference between, we talk about real estate adjacent careers,

[00:15:12] the difference between being a mortgage agent is you can help clients strictly online. You can

[00:15:18] still be a complete expert, but I've done dozens and dozens and dozens of deals where I've never

[00:15:23] met my clients face to face, but I'm able to still go and build that trust and have the

[00:15:29] ability and the luxury to have the freedom to work from anywhere. Yeah, I think that

[00:15:33] when people are thinking about getting into the real estate profession, that's one of the big

[00:15:36] differentiators between being a realtor and although I think Dave Hodge seems to be being

[00:15:41] a realtor remote pretty well there in Mexico. But I think this is the big difference, right?

[00:15:49] Is that freedom, that ability to be a digital nomad to work from wherever, which you don't

[00:15:55] really see taking place in the real estate profession as like a realtor because you

[00:16:00] as a realtor, you got to go show the property, touch and feel it, meet clients in person, etc.

[00:16:05] Yeah, exactly. I'm not there. I mean, I am there because it's me, but most mortgages aren't there

[00:16:10] commenting on the foundation or something like that. Right. Okay, one of the other ones I want

[00:16:15] to throw in here is and this might seem a little sappy, but it's genuinely true,

[00:16:21] helping people. Now, I've met some really great people in this world who take this job

[00:16:29] and their clients very seriously. And that's because they know and I like to think that most

[00:16:34] of us in our industry know that we are personally helping these people with a lot of, for most

[00:16:41] of them the biggest financial decision of their lives. Right? So I take my job and I take my role

[00:16:47] extremely serious as your mortgage agent. And I think that that should be kind of

[00:16:52] the first thing that anyone that is looking to either become a mortgage agent,

[00:16:56] you got to remember, right? There's like doctors take the Hippocratic oath. Like we've got our own

[00:17:01] thing. We've got a fiduciary responsibility here. And then anyone does need-

[00:17:05] Doesn't your business card say I put the douche in fiduciary duty?

[00:17:13] Anyway, I think that I think the last major Y is-

[00:17:17] No, hold up. That was really, really good. And no, it does not. Let me clarify,

[00:17:21] but it might after that.

[00:17:25] The last major Y that you've shared with me and that I've heard from others is the ability to

[00:17:30] understand numbers, right? And deals and to be closer to them. One of the things that really

[00:17:35] changed my trajectory as an investor was meeting one of my best friends, Jonathan Gibson, who's a

[00:17:41] business partner of ours in the broker record at Land Bank, which is a commercial mortgage brokerage.

[00:17:49] He really just- Before, whenever I was buying investment properties, I was basically just using

[00:17:54] a big six bank. And that was obviously very limiting. And I didn't have a lot of knowledge on

[00:17:59] alternative products or other ways to get due deals. And his understanding of the structure

[00:18:06] and format of mortgages and the next ones to use to scale completely changed the game for me.

[00:18:12] There's no way I would have got my second or third assets. I probably still wouldn't

[00:18:15] own them today had I not met him. Yeah, no. Again, like best friend slash power team,

[00:18:23] right? Like that guy changed and same thing with Rih. I mean, when I met him and Johnny and I

[00:18:30] started working in the mortgage space together, I already had three properties. I was already

[00:18:34] what I considered a well on my way real estate investor, right? I had a couple of duplexes,

[00:18:39] they were all with the big six bank. And we used a mortgage broker to go through that process,

[00:18:45] even though we ended up at a big six, which again, often can happen.

[00:18:49] And it was through that experience that I was like, I need to know more. I need to be closer

[00:18:55] to these numbers. I need to understand these deals with that financial lens on.

[00:18:59] Yeah, I think it's interesting you mentioned the big sixes as well. A lot of the big six

[00:19:03] are back in the broker channel, right? Like a lot of them were not for a while. You couldn't

[00:19:08] was it TD? I think BMO as well, a couple other groups that you couldn't get through the broker

[00:19:14] channel. And now they're getting back to offering their products through mortgage brokers. Like

[00:19:19] before, if you wanted to go to some of those banks, I don't know, I probably named the wrong

[00:19:22] lender. So don't take my word on that one. But you had to go direct to the bank. Whereas a

[00:19:28] lot of the other, like any B or private or whatever, you could get through mortgage brokers.

[00:19:33] Now, mortgage brokers kind of have a lot of the A products, a lot of the Alt A products and B

[00:19:38] products as well. Exactly. I guess the next question would be how do you go about becoming

[00:19:43] a mortgage agent? I'm just going to answer it here. It's actually pretty simple. You can

[00:19:48] try to teach yourself online with six months access, which I think I've expired that access

[00:19:54] like four times already. So they're just getting money. I'm like the guy who buys

[00:19:58] the gym membership and just doesn't go to the gym when it comes to the mortgage course.

[00:20:02] Yeah. And then you need to pass a test or you can do a week online or in person to take that said test.

[00:20:09] Yeah, I actually tried to do the first time around and I remember one of the first,

[00:20:14] it may have been the first or second time you let that expire. I had just completed mine.

[00:20:19] I went and bought the big textbook and was like, I can do this stuff online with no help. And

[00:20:23] I was busy at the time. I was managing multiple properties. I had a small business

[00:20:28] and I just found it really hard. So I just jumped in and decided to do the course.

[00:20:34] Was done it in a week past the test and there you go.

[00:20:38] It is kind of crazy actually when you think about it that like your realtor license takes

[00:20:42] like six months to a year now and then mortgage thing can be done in like a week. And it's

[00:20:47] anyway, I mean, it makes it definitely a lower barrier to entry. Like if you're

[00:20:51] going to do one, if you're going to just, if you're just dipping your toe in to see if

[00:20:54] you even like the real estate profession, it's probably the lower lift. It's a lot cheaper

[00:20:59] too than a realtor course. I think it varies on the province by province basis though, right?

[00:21:04] Like I think in Alberta it's the opposite. It's like the mortgage course is way longer and the

[00:21:08] realtor course is shorter or something like that, right? So yeah.

[00:21:11] Yeah, it does differ across the country for sure.

[00:21:14] Yeah, so provinces use different terminology to refer to mortgage brokering professionals

[00:21:18] such as agent, associate salesperson, sub-mortgage brokerage which sounds kind of like

[00:21:23] sub-prime mortgages that was a risky one for them to go for.

[00:21:28] So you want to obviously check each province for the correct licensing and registration information

[00:21:33] and requirements. Yeah, exactly. So I'm going to just speak to Ontario because that's where we both

[00:21:39] live Dan and a lot of our audiences here and hey that's the largest portion of our audience for

[00:21:44] sure. Yeah, and not only that but I don't know. I'm a broker here now. We do deals through our

[00:21:50] network across the country so if you are listening in any other province and want to work with myself

[00:21:55] and my team and Dan on that side of things let us know but I want to talk to you because this was

[00:22:01] my personal experience and I want to go through how easy it was for me to get this license which

[00:22:08] may or may not be a good thing or a bad thing. I feel like I've done a pretty good job but

[00:22:11] just like with anything, just like with any industry you'll have people that just really

[00:22:16] should not be out here brokering. So anyways, all individuals acting as a mortgage agent level one

[00:22:23] in Ontario must have a license from the FSRA. They must also be sponsored by a one license

[00:22:30] mortgage broker so you can't just get your you can't just pass this test and go out and start

[00:22:34] dishing out slinging out mortgages okay? You have to still co-invind a broker of record

[00:22:39] and someone to work with. Now the fee for a new mortgage agent level one license is $941

[00:22:46] really not bad and you can get that course in Ontario and other places in Canada through these

[00:22:52] three websites, Mortgage Professionals Canada, Canadian Mortgage Brokers Association in Ontario

[00:22:58] and then Real Estate and Mortgage Institute of Canada. No we are not working with or

[00:23:03] sponsored by any of these places. These are just good places to go and research if you want to

[00:23:09] either work with a mortgage agent to get an understanding or to become one yourself.

[00:23:13] So after that I think you'd want to look at sort of what you'd require to get your license if you

[00:23:20] want to become a licensed mortgage agent you must be over 18 sorry for our 17 year old listeners

[00:23:26] that we actually do have some there was some some beauties in the course that were like just

[00:23:32] absolute go-getters wanting to or in the free webinars and the five day challenge that were

[00:23:38] wanting to just crush deals. I remember I was like that when I was 17 too just doing oh yeah so

[00:23:43] you must be a resident of Canada you must have an Ontario mailing address if it's the Ontario one

[00:23:48] I'm going to assume it's in not a post office box you must have a valid email address you

[00:23:52] must be authorized by a mortgage brokerage to deal in mortgages complete and approved mortgage

[00:23:58] education program and be suitable for a license. Okay so if we go through that list pretty easy

[00:24:05] basically a Canadian over 18 with an email address and an address and a thousand bucks in your pocket

[00:24:11] a thousand bucks and a completed educational program okay so again we're about to get

[00:24:17] into the commissions part here right because that's what everyone wants to know about money,

[00:24:20] mula, how much are mortgage agents making something everyone seems to be curious about

[00:24:26] but often gets wrong. Now similar to real estate agents Dan as you mentioned the perception around

[00:24:33] mortgage agents is that it's easy and you can get in there and make a ton of money and why are you

[00:24:38] smiling because I was remembering my joke before and in some cases that's true and

[00:24:49] in some deals will be nice easy files and then some mortgage agents make a killing but

[00:24:56] it's not always the case right. No exactly right similar to real estate agents, mortgage agents

[00:25:02] and brokers for the most part are entrepreneurs and small business owners and you don't get your

[00:25:08] license and you know get your desk all set up and the phone starts ringing do you? Yeah it's

[00:25:13] funny that there's this expectation in your profession you know like it's like oh yeah I'm just

[00:25:19] gonna get my license and I'm just gonna put it in my Instagram bio and then people are just

[00:25:24] going to do deals with me something like that you know I don't know. I mean we see it all the

[00:25:30] time right I can't remember how many times I've gotten the question hey I think I'm gonna get

[00:25:34] my real estate license I think I'm gonna get my mortgage license you know I'm still gonna

[00:25:39] keep my other job I'm just gonna do this you know I'll just do my own deals or I'll do

[00:25:42] them for my friends or whatever and you know that you might get a couple deals done with

[00:25:51] friends and family kind of thing but is that someone that you want? You want someone who is part time

[00:25:57] to be handling some of the biggest financial risks of your investing life so for me you know

[00:26:04] this really does have to kind of be a full-time thing right I mean now some might point the

[00:26:11] finger back and mean say Nick you're a hypocrite you're not a full-time mortgage agent well

[00:26:14] you're right I'm not but I have a full-time team of people that sit in an office that help me get

[00:26:21] this stuff done. I also when I'm not doing my full-time mortgage stuff I'm still hyper involved

[00:26:28] in real estate, real estate transactions understanding the market so that's my excuse there

[00:26:33] I'm more talking about the people that are looking at this as a way to make an extra 10 20 grand

[00:26:38] a year or 50 to 60 grand a year I'm just very hesitant to work with those people because I don't

[00:26:43] think they understand the business and the grit that you need you almost need to suffer for the

[00:26:48] first couple years of being a mortgage agent or real estate agent to really kind of come out

[00:26:53] better the other end Dan and I know you had probably as with almost everybody that starts

[00:26:58] you know a rough slow couple years as you learned the market learned how to be a business

[00:27:02] person. Yeah I mean I was kind of a little bit

[00:27:06] advantaged because I joined a family business so I guess I would have probably started on third base

[00:27:12] there but you know I didn't end up actually working with the family business in the fullness

[00:27:16] of time because um I mean it's not easy to work with family and differences and they were

[00:27:21] kind of winding down while I was winding up but um yeah I mean even for me I think my first

[00:27:26] my first year I probably only did like 35 or maybe 50 grand in deals and then by year two I was doing

[00:27:34] like double triple that and it wasn't really related to being in a family business it was just

[00:27:42] like learning the business learning systems how to generate new leads how to how to service

[00:27:47] clients properly etc. I guess on that note because a lot of that is really like learning

[00:27:54] the day to day minutia of what it took to be a successful real estate professional and I don't

[00:27:58] even really know the answer to this for your profession what is it what is a typical day

[00:28:02] or week look like for a mortgage professional? Yeah well you know it's usually a number of

[00:28:07] things right it you know I can guarantee you that uh it involves lots of calls calls with

[00:28:13] clients um explaining their options requesting new information going over different products with

[00:28:20] them collecting and organizing a ton of documents engaging with underwriters and lenders on different

[00:28:27] projects engaging with lenders understanding mortgage products so a lot of research and then

[00:28:32] taking that research and and kind of understanding it digesting and giving it back to our clients

[00:28:38] and again the actual nuts and bolts of the business right making the calls getting the

[00:28:42] clients collecting the documents and you know selling us or so forth from there. Yeah and I

[00:28:49] guess you also are still running a business right so you have to do all of the small businesses

[00:28:54] practices and entrepreneurship and all of the other responsibilities that other business owners

[00:28:59] have as well right so like marketing accounting business development and the list goes on and

[00:29:05] maybe like some of that can be outsourced and that comes down to your power team like for me

[00:29:09] you know my accountant who does the accounting on all of our properties does my personal

[00:29:14] accounting because you want all of that whole web so they know you know where dividends

[00:29:17] are going or property management fees are going or etc right so that's just one example of sort of

[00:29:23] how you can create a bit of a symbiosis with your real estate business and your what's called a mortgage

[00:29:28] agent business or realtor business or whatever it is if you're a contractor I know a lot of listeners

[00:29:31] are our contractors T4 employees it's obviously a little bit different but they get the added

[00:29:37] bonus of you know they're super easy to qualify for mortgages so on that note of you know

[00:29:41] getting paid how does a mortgage agent get paid yeah yeah great question okay so let's talk

[00:29:47] commissions so commissions range and range anywhere from you know a half a point so 0.5 to

[00:29:54] you know standard is 1% we do see them go go higher in some cases but that is paid by the

[00:30:02] mortgage lender to the broker or agent as a finders fee so generally you won't secure a better rate

[00:30:09] by going directly to the lender or bypassing the broker we are there to add that value and

[00:30:14] since the lender pays the commission the mortgage broker typically doesn't charge the client any fees

[00:30:20] right so essentially I work for you for free when I'm like okay you know Dan you give me your

[00:30:26] file I look it over collect some docs I'm like okay this is what he's trying to buy this is the

[00:30:31] product okay looks like could be good for scotia bank I then give all your stuff to scotia bank

[00:30:38] they look at it we package something up for you at the end when I get paid it doesn't come out of

[00:30:43] your pocket scotia bank pays me that finders fee now there are places where you can put mortgage

[00:30:50] broker fees in and as investors listening to the show you're more likely to see that then let's

[00:30:56] say an end user buying an end user piece of property because fees for brokers are only

[00:31:02] applied to mortgages that are a bit more difficult to match with lenders and that can be

[00:31:06] in the private space and the alt space the b space and that's because those lenders either

[00:31:11] don't pay you that finders fee or that finders fee is drastically reduced and that's because

[00:31:16] that lender is taking on a lot more risk so that's how they get paid now let's look at some

[00:31:23] examples here Dan yeah so when commissions are built into the mortgage rate some brokers

[00:31:27] offer buy downs reducing your mortgage rates by sharing a portion of their commission

[00:31:32] that's a key difference when choosing kind of broker versus banks to illustrate and I think like

[00:31:38] a butler mortgage which would be Ron Butler they are like you know high volume and I think they buy

[00:31:43] they buy down rates right that's how they're able to have like the cheapest rates in exactly in

[00:31:47] the country and let's kind of just illustrate that and we'll show okay a major bank would be

[00:31:55] offering a 1% commission so if you look for a $500,000 mortgage once approved the bank

[00:31:59] gives the broker a 1% of the mortgage amount so that 1% commission ends up being $5,000 on the

[00:32:05] $500,000 and they can actually you know reduce that fee and the portion of that goes to basically

[00:32:10] almost like prepaying interest or buying down the the interest that the borrower ends up

[00:32:16] taking yeah exactly so again just using that example right let's say a $700,000 mortgage

[00:32:22] 1% commission $7,000 $2,250,000 mortgage $2,500 kind of thing right so it's pretty simple after that

[00:32:30] now as we stated though this varies I know mortgage agents struggling to do one deal a month

[00:32:38] and I know mortgage agents struggling to do a couple deals a month I know also know

[00:32:43] some they're doing several deals a week and some that do several deals a day now

[00:32:48] we took this from Glassdoor which probably isn't the best place to find mortgage broker data because

[00:32:55] Glassdoor is really for employees but it's really hard just similar to realtors it's hard to figure

[00:33:00] out who's making the money because mortgage brokers as you were saying Dan we're all

[00:33:05] entrepreneurs we're business owners not only do we make the calls and work with clients but

[00:33:10] you know a lot of these people are self-employed they have variable income

[00:33:13] so the average salary for a mortgage broker is about $108,000 per year in Canada ranging on the

[00:33:19] low end from just over 40,000 to all the way up to over 125,000 now that's based off of 68 salaries

[00:33:27] there were anonymous anonymously sorry submitted to Glassdoor so you know they have the average

[00:33:33] at $71,000 per year and that was from 515 different salaries reported that was from

[00:33:40] indeed so you know if you look at this I opened up by saying there is the opportunity to make

[00:33:46] doctor money right that's one of the reasons why people get into this Dan you said it's lucrative

[00:33:51] well it is lucrative similar to being a real estate agent but you have to build out the

[00:33:56] systems the practice you've got to go find the clients you got to have the back-end power team

[00:34:00] to support those clients so to become a top producer in the mortgage space it is very

[00:34:06] difficult similar to being a top producer in any space yeah absolutely I guess let's hop into

[00:34:14] a quick comparison of brokers versus agents versus banks so the pros of getting a mortgage

[00:34:21] through a broker would be a variety of choice so obviously again if you go to a bank they're just

[00:34:25] going to be like here's what we have and then maybe you know depending on who they are they

[00:34:28] might send you to like an all-day as well but mortgage brokers can offer you you know

[00:34:33] a bunch of products and allow you to compare them for multiple lenders they can often get discounted

[00:34:39] interest rates because they can negotiate better rates and especially like large brokerages that

[00:34:44] are part of a network they all get kind of volume discounts with that lender

[00:34:49] brokers are obviously there they would have that fiduciary duty that Nick referenced to you

[00:34:55] not to the bank where as a bank agent are obviously working in the bank's best interest

[00:35:00] and a mortgage broker would be working in your best interest the cons would be you could miss out

[00:35:05] on some offers not all lenders work with every mortgage broker and so you might you might be

[00:35:11] able to get a better deal from your bank and it's not uncommon that people can get a really good

[00:35:14] offer from their own bank the other thing is your bank might ask you for a little bit less

[00:35:18] paperwork because they already have like your pay stubs in your your income they see your checks

[00:35:23] go in all the time and so they might not be as demanding on the paperwork side of thing

[00:35:29] the other pieces fees mortgage brokers are technically free for credit where they borrowers

[00:35:35] again if you that you might have to have a fee on top of that or there are fees that that

[00:35:40] are built into the contract and the loan and you're not always guaranteed quality service

[00:35:47] and you know at a bank obviously like they're vetted they're trained you know they have

[00:35:52] a big name like RBC behind them as an example whereas brokers you know it's they're more

[00:35:57] like individual salespeople entrepreneurs and so not all of them are superstars so you want to look for

[00:36:03] a full-time broker who has years of experience and a large lender network and a lot of

[00:36:07] like a really good quality track record yeah those great advice Dan you know I will push back

[00:36:13] just a little bit and say you know I have had multiple clients that have that have left the bank

[00:36:19] and come back to the broker channel because they've had that same you know lack you know lacking

[00:36:24] experience at the bank right now go on the bank note let's just quickly chat on some pros and cons

[00:36:30] of getting a mortgage through the bank again I am obviously a mortgage broker so I don't want you to

[00:36:35] go get a mortgage through the bank because then I am not able to help you but in some cases for

[00:36:39] some people it does make sense of course I'm not going to sit here and say that so let's look

[00:36:44] at the pros the pro is trust the comfort of dealing with you know a national brand inside

[00:36:51] of your local branch can take the stress out of buying a home right which can be a very stressful

[00:36:57] very stressful for a lot of people and I know you know I hold my clients hands throughout our

[00:37:02] process and they're still stressed out right it's a big deal so the other pro for going to a bank

[00:37:08] and this one is a big one we see this a lot we lose clients to this is the ability to

[00:37:13] leverage your existing relationship with your bank right you may get a better deal there

[00:37:18] especially in today's environment where mortgage originations are at an all-time low

[00:37:23] banks are really doing whatever they can to keep you around but so are mortgage brokers and we are

[00:37:28] working hard to do that so quick on the cons of working with the bank main one that I always

[00:37:34] talk about is limited selection a bank can only offer you their own products whereas mortgage

[00:37:39] agents have tons of options even in that you know quote unquote a space where you'd

[00:37:45] have very comparable rates but you're dealing with lending institutions that are specifically

[00:37:50] known for mortgages so the the institutions I'm talking about don't have savings accounts

[00:37:56] checking's accounts and branches that you can go in and you know start an investing fund in

[00:38:00] the other kind of working with the bank or stricture conditions for approvals right banks

[00:38:05] typically have higher eligibility requirements which can make for more challenges when looking

[00:38:12] to be approved now if you're listening to this show I would say that you either will

[00:38:18] or you either do now or will eventually fall into that typically um harder to get funded by your

[00:38:26] schedule a classic a lender bank just because after you know for a lot of them after you've

[00:38:30] hit four or five properties they won't give you mortgages anymore a lot of our listeners and

[00:38:36] a lot of our clients Dan have variable income where you know one month is good one month is not

[00:38:41] so good or multiple businesses right not a lot of the classic t4 um employees uh so you know there are

[00:38:50] there's definitely benefits there's pros and cons to going with both the biggest pro that I would say

[00:38:56] by using a mortgage agent right off the bat especially if you plan on building a portfolio

[00:39:02] is that will be an ongoing member of your power team whereas in a lot of cases you may

[00:39:08] outlaw the bank or the bank employee might switch you out you might not have that go to person there

[00:39:14] so that would be my main and probably final piece there yeah I don't uh I don't have much to add

[00:39:21] to that I think it's very well said um the one question that I would have for you is like as an

[00:39:26] individual like I know for me as a real estate professional one of the things that's really

[00:39:31] helped me is just being in the market you know understanding valuations seeing deals as they

[00:39:37] come up right like I do a lot of um lender dispositions so like power of sale work and

[00:39:43] I see a lot of deals come in that are going power of sale and and that can be helpful for me you

[00:39:48] know if I see deals that I want to purchase or you know it can help me understand what rents are

[00:39:54] in different buildings understand what cap rates are understand trends if prices are going up

[00:39:58] and down and kind of get ahead of them kind of have an ear to the ground sentiment so it's

[00:40:07] like a realtor in as an investor how do you find it helps you know being a mortgage broker helps you

[00:40:18] get a bit of an advantage maybe or just how has it kind of helped you as a real estate investor

[00:40:24] yeah you know it's it's funny I'm not going to stay here and say that that

[00:40:28] that becoming a mortgage agent will make you a better real estate investor just like

[00:40:32] I agree that just or just how I believe that becoming a real estate agent will not make you a

[00:40:37] better real estate investor I think it really becomes with the mindset going into it I wanted to

[00:40:42] become a mortgage agent so that I could not only become a better investor myself rework my investment

[00:40:47] thesis have a better understanding of the numbers and a better understanding of the products

[00:40:51] they existed out there but also to be able to help other people do that too now I know a ton

[00:40:57] of mortgage agents and a ton of real estate agents whether they are successful or not they

[00:41:01] do not you know they might own their primary residence but they do not own any investment properties now

[00:41:07] you know I think that if you are an investor or if you are a person that is looking to maybe bring on

[00:41:13] a real estate agent or sorry a mortgage agent onto your power team or become one yourself

[00:41:19] I think it really is doing how we how we advise other people to do a lot of things it's

[00:41:23] going in with the right intention I work a lot with investor focus realtors or I help people

[00:41:29] that you know are buying their first property and then are going to look at buying their next

[00:41:34] property with us and you know Dan some in some cases I'm working with clients for years before we

[00:41:40] maybe get that first or that second transaction kind of thing so you know me going into this

[00:41:46] has really transformed the way that I look at real estate I really look at it more from my

[00:41:52] financial standpoint and a number standpoint at this point and really in a way that I can

[00:41:56] use these financial instruments to help push my thesis along it to help me grow in faster and

[00:42:05] more strategic ways yeah I think being in touch with like lenders as well and understanding what

[00:42:12] like you know what deals are getting funded right you're seeing like you're you start to get a

[00:42:18] little bit of a touch for like the qualitative portion of it like a lot can be said for you

[00:42:22] know what you know knowing rates or knowing what mortgages are available but also just like seeing

[00:42:26] what deals are successfully getting funded especially in a market where like we're just

[00:42:30] seeing credit contraction right where lenders aren't really lending like I said a long time ago

[00:42:37] that you know it wouldn't just be the cost of capital it would be the availability of capital

[00:42:42] that is going to matter when candidate goes into an economic downturn and I think more

[00:42:48] now than ever we're seeing that take place right like lenders aren't funding bad deals

[00:42:54] even if the borrower qualifies or the deal technically qualifies on paper you know they're

[00:42:59] much more strict because they're seeing all of the losses that have accumulated from

[00:43:02] bad deals bad investors bad strategies over the past and I think as a broker seeing what lenders

[00:43:13] are funding what what deals are getting pushed through what deals are going power of sale

[00:43:17] right what deals are failing what deals are succeeding that gives you a huge connection to

[00:43:23] stuff that you just can't really see represented in data or whatever else right it's a really

[00:43:28] qualitative advantage there so yeah I think that's all I have yeah awesome okay well I

[00:43:34] that's it for me too we hope everyone got a ton of value out of today and whether you are looking

[00:43:40] to become a mortgage agent or working with one or considering working with one

[00:43:44] listen this episode and go go talk to some of them and see see what they can do they

[00:43:48] they can play a integral role on your power team they can make a lot of money or almost nothing

[00:43:56] and I hope we kind of pulled back the curtain on on how the industry works a little bit

[00:44:02] hope you got a ton of value go sign up on that mortgage on that mortgage no go sign up for our

[00:44:08] VTB our vendor take back mortgage webinar that is the next one on the list the link is in the

[00:44:13] show notes thank you so much talk to you soon the Canadian real estate investor podcast is for

[00:44:20] entertainment purposes only and it is not financial advice nick hill is a mortgage agent with premier

[00:44:27] mortgage center and a partner in the G and H mortgage group license number 10317 agent license

[00:44:38] m21004037 daniel foch is a real estate broker licensed with rare real estate a member of the

[00:44:46] canadian real estate association the toronto real estate board and the ontario real estate association