Hi Guys, after receiving some great advice in my last post I am confident that there are no questions too simple. I now understand that my broker is very important in taking my first steps to successful investing. What I would like to know is what questions should I be asking my broker to determine how effective he/she is? What else should I be considering in order to find the right broker for me?
questions to ask a broker
- Thread starter Renae
- Start date
Agree with this completely. Sitting down with new clients, they sometimes have some basic gateway questions - these are quickly discarded as they realise they are pointless for the most part as *anyone* could answer them correctly. More important is getting down to the actual conversation and the client feeling confident + comfortable with the strategy and advice given.
I don't think it's about asking a pre-defined list of questions and assessing the answers. The MFAA (an industry body) has published a list of questions, every broker worth their salt has figured out some answers to them.
I'd start by reading various posts and comments. Don't just look at how many times someone has posted, instead think about what they're saying. There's been plenty of cases where people get their post count up simply by saying, "I agree".
Also consider how long the broker has been in business. It's one thing to say, "Don't cross collateralise", "Use lenders in the right order". Until a broker has been around for 4+ years, they probably don't really understand what the implications of this are. There's people asking these questions right now getting what appear to be reasonable answers, but those answers are going to drive them into a brick wall in about 2-5 years. It's one thing to know the theory, but the practice is another thing altogether.
Once you're comfortable with your background research on the broker's knowledge and their experience, arrange a meeting.
At this point it should be as simple as assessing how well the broker can assess your situation and provide solutions for you that meet your immediate and long term goals. A reasonable conversation should give you some insights to how compatible a broker is with your needs.
To be fair, this doesn't just apply to brokers. It can also be applied to property managers, buyers agents and any number of other professionals.
I'd start by reading various posts and comments. Don't just look at how many times someone has posted, instead think about what they're saying. There's been plenty of cases where people get their post count up simply by saying, "I agree".
Also consider how long the broker has been in business. It's one thing to say, "Don't cross collateralise", "Use lenders in the right order". Until a broker has been around for 4+ years, they probably don't really understand what the implications of this are. There's people asking these questions right now getting what appear to be reasonable answers, but those answers are going to drive them into a brick wall in about 2-5 years. It's one thing to know the theory, but the practice is another thing altogether.
Once you're comfortable with your background research on the broker's knowledge and their experience, arrange a meeting.
At this point it should be as simple as assessing how well the broker can assess your situation and provide solutions for you that meet your immediate and long term goals. A reasonable conversation should give you some insights to how compatible a broker is with your needs.
To be fair, this doesn't just apply to brokers. It can also be applied to property managers, buyers agents and any number of other professionals.
When I started searching for brokers I asked them questions I didn't understand, and evaluated their responses. Questions like
- Should I buy 5, 10 or 20% deposit
- Here is my goal, can you map the loan structure to reach that goal
- Which lenders are suitable for my strategy
Etc etc.
Just as important as the answers, find who you connect best with and has your best interests at heart.
Good luck
- Should I buy 5, 10 or 20% deposit
- Here is my goal, can you map the loan structure to reach that goal
- Which lenders are suitable for my strategy
Etc etc.
Just as important as the answers, find who you connect best with and has your best interests at heart.
Good luck
Definitely make sure of the following:
- What your plan is in terms of purchasing ($ value etc, time frame), discuss with them and map out up front on which lenders and why (ensure that they are MAXIMISING your ability to borrow as opposed to choosing an easy way out to the quickest lender)
- If they are unwilling to draw up this lender choice plan then this is concerning
- Ensure they are not making serious assumptions about your situation and covering all basis
- Ensure they are responding to your queries in full and that it doesn't take too much probing to get an answer. Must be to the point and succinct in verbal & written communication
- Are they willing to think out of the box?
- MUST be able to look at the big picture, rather than ticking boxes & churning loans
- Be willing to cover all basis as opposed to looking at one deal at a time (as an investor you are always looking deal x+1). If they keep brushing aside your plan after IP x then obviously they do not align with your goals (assuming you want to purchase further)
- Must have a content management system in place that they use effectively. Otherwise this is not good use of your time and is inefficient
- As an investor ensure that the broker you choose is able to work past IP 5/6/7 etc as you don't want to be stuck due to incomplete/ineffective/incorrect advice earlier on
- Last, go with your gut feel on who would be best placed to be your broker. All that glitters is not gold.
Telling this from experience.
All the best!
MsAli
- What your plan is in terms of purchasing ($ value etc, time frame), discuss with them and map out up front on which lenders and why (ensure that they are MAXIMISING your ability to borrow as opposed to choosing an easy way out to the quickest lender)
- If they are unwilling to draw up this lender choice plan then this is concerning
- Ensure they are not making serious assumptions about your situation and covering all basis
- Ensure they are responding to your queries in full and that it doesn't take too much probing to get an answer. Must be to the point and succinct in verbal & written communication
- Are they willing to think out of the box?
- MUST be able to look at the big picture, rather than ticking boxes & churning loans
- Be willing to cover all basis as opposed to looking at one deal at a time (as an investor you are always looking deal x+1). If they keep brushing aside your plan after IP x then obviously they do not align with your goals (assuming you want to purchase further)
- Must have a content management system in place that they use effectively. Otherwise this is not good use of your time and is inefficient
- As an investor ensure that the broker you choose is able to work past IP 5/6/7 etc as you don't want to be stuck due to incomplete/ineffective/incorrect advice earlier on
- Last, go with your gut feel on who would be best placed to be your broker. All that glitters is not gold.
Telling this from experience.
All the best!
MsAli
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Some great responses above.
Personally, I often find that its my job to flesh out the detail of what someone's looking to do. This often involves me being the one asking the questions. A fair chunk of my clients come to me with a surface understanding of what they're trying to do. I think its partly my role as their financial professional to assist in crystallising their objectives, goals and pathway to achieve them.
It also helps ensure that I set it all up correctly. A client may come to me stating their looking for good land content in Sydney around 600k. That's a great starting point, but without prodding much deeper, I mightn't know what the clients seeking to do longer term. E.g. they may have intentions to turn it into a dual occ/build/etc. Without factoring some of those medium term considerations at play, I may end up putting them in the wrong lender.
Point is, its a two way street. Its not only about the questions you ask them, but also the questions they ask you.
Cheers,
Redom
Personally, I often find that its my job to flesh out the detail of what someone's looking to do. This often involves me being the one asking the questions. A fair chunk of my clients come to me with a surface understanding of what they're trying to do. I think its partly my role as their financial professional to assist in crystallising their objectives, goals and pathway to achieve them.
It also helps ensure that I set it all up correctly. A client may come to me stating their looking for good land content in Sydney around 600k. That's a great starting point, but without prodding much deeper, I mightn't know what the clients seeking to do longer term. E.g. they may have intentions to turn it into a dual occ/build/etc. Without factoring some of those medium term considerations at play, I may end up putting them in the wrong lender.
Point is, its a two way street. Its not only about the questions you ask them, but also the questions they ask you.
Cheers,
Redom
When I started searching for brokers I asked them questions I didn't understand, and evaluated their responses. Questions like
- Should I buy 5, 10 or 20% deposit
- Here is my goal, can you map the loan structure to reach that goal
- Which lenders are suitable for my strategy
Etc etc.
Just as important as the answers, find who you connect best with and has your best interests at heart.
Good luck
I must say, your story of how you chose your broker was brilliant. Should be part of your amazing interview mate.
I've had brokers who have just sat there and waited when a small block got in their way and others who were creative, connected enough and aggressive enough to just pull through and get things done.
The worth of anyone in business is how do you handle things when **** hits the fan? What happens if bad credits get in the way, banks stalling, etc or other road blocks?
Anyone can run a business when things go smoothly, but how do you handle situations that have gone wrong. The only way you will know that is to test them out in real life.
With multiple property sales on the line, I know the people I can call to get things through when the vendors chosen broker is sitting on their butt waiting for better weather!
Also with property managers - there are ones that sit there and cry when a piece of paper lands on their desk and there are ones that can cope with any situation even when things turn really bad.
The worth of anyone in business is how do you handle things when **** hits the fan? What happens if bad credits get in the way, banks stalling, etc or other road blocks?
Anyone can run a business when things go smoothly, but how do you handle situations that have gone wrong. The only way you will know that is to test them out in real life.
With multiple property sales on the line, I know the people I can call to get things through when the vendors chosen broker is sitting on their butt waiting for better weather!
Also with property managers - there are ones that sit there and cry when a piece of paper lands on their desk and there are ones that can cope with any situation even when things turn really bad.
Exactly my thoughts! That's how I found out a great one after about 6 or 7 changes, it was the questions and answers provided by the broker that answered most of my questions, even before I had to ask!
You need a good relationship to disclose everything too so they can work for your circumstances.
Often investors in their early stages don't know what they don't know so cannot ask the questions they need answers for and may not know what strategy will suit them.
I agree with Redom, a role of a finance strategist is to help formulate and crystallise an investors ideas, to put flesh around them and to help work out what is the art of the possible rather than being in fantasy land. It is that two way conversation about goals, long term plans, ways to achieve these, what type of properties, how then you need to use lenders, LVR's, purchase prices, rent yields etc. The discussion then needs to include structures, tax effectiveness, debt recycling etc and if they do not know or unable to give substance, have access to professionals who can,
There are a lot of mortgage brokers out there who know lender policies backwards, who know what credit cards lenders offer, what the professional pack benefits are but have little idea how to help a multiple property investor build a portfolio. Work out what you need and approach it on that basis.
I agree with Redom, a role of a finance strategist is to help formulate and crystallise an investors ideas, to put flesh around them and to help work out what is the art of the possible rather than being in fantasy land. It is that two way conversation about goals, long term plans, ways to achieve these, what type of properties, how then you need to use lenders, LVR's, purchase prices, rent yields etc. The discussion then needs to include structures, tax effectiveness, debt recycling etc and if they do not know or unable to give substance, have access to professionals who can,
There are a lot of mortgage brokers out there who know lender policies backwards, who know what credit cards lenders offer, what the professional pack benefits are but have little idea how to help a multiple property investor build a portfolio. Work out what you need and approach it on that basis.
A question I wished I had of asked my broker when starting out. (Can only now distill it with hind sight!!), would be: what lender and 'spread' tactics can you help build foundations with/for me 'now' to make sure that, come 5 years and 5+ properties down the track, I still have access to some lenders who won't say 'no!' To me! How can I ensure that whatever lender and loan decisions I make with you now; that these won't hurt me as I grow my portfolio (and hopefully grow my relationship with you and the business I bring you)
This shows you are looking for a longer term professional partnership. They'll take you more seriously and not just put you in any old loan product just to get the one-time business 'win' out of you as a customer.
This shows you are looking for a longer term professional partnership. They'll take you more seriously and not just put you in any old loan product just to get the one-time business 'win' out of you as a customer.
That is a very good question ^^
Hi
I think whats more important is the broker asking the right questions to the client and also have some sort of connection with the client.
I think whats more important is the broker asking the right questions to the client and also have some sort of connection with the client.
