Cohen Handler CEO and buyer’s agent Ben Handler joins the Smart Property Investment Show to discuss the real value of a buyer’s agent, how using one can help property investors in building their portfolio and the cultivation of buyer’s agents today.
The property investor turned buyer’s agent reveals the reasons he started investing, why he turned it into his career and his advice to listeners thinking of doing the same.
Ben discusses the fundamental principles of being a successful property investor as well as the key things to look out for when considering a property purchase.
You will also hear about why emotion needs to be removed when purchasing, how speed and numbers are fundamental and what has changed through the years in the investing/buyer’s agent industry.
If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: Facebook, Twitter and LinkedIn.
If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!
RELATED AREAS OF INTEREST:
Negative gearing negativity on the nose
How recent changes in the finance industry will impact you
What are the realities of property investing?
How renovation can improve cash flow
Announcer: Welcome to The Smart Property Investment Show with your host Phil Tarrant.
Phil Tarrant: Good day everyone it's Phil Tarrant here, welcome to the Smart Property Investment Show. Thanks, good to have you onboard and aong this journey as we explore creating wealth through property. If you've been tuning in for some time you'll see there's a diversity in the type of people that we get onto the show and they range from first time investors to investors with really sizable portfolios in 10s, 20s, 30s, 40s and 50s. I'd also like to draw on some of the talent coming from the property investment industry and we've got some great buyer's agents, accountants, mortgage brokers, data providers that all operate within this space who hopefully have good intention to support property investors as they embark on that journey to create wealth.
Today, I've been having an interesting chat in the portfolio, we're going to straddle both of those two components. Investing in property but also someone who has experience here and runs a business in that space as well. I've got Ben Handler, he's a CEO of CohenHandler, they are a buyer's agency business, you might have, if you've tuned beforehand, heard his business partner, Simon Cohen on the show. These guys are based in eastern suburbs of Sydney but from what I understand you buy right across Australia, is that right Ben?
Ben Handler: Absolutely. Queensland, Melbourne and New South Wales.
Phil Tarrant: You've come out of the shadows and come behind a microphone rather than Simon being here. What brings you out today rather than him? You guys have built an interesting business over a number of years. From what I understand you are the man behind the scenes who does a lot of the heavy lifting in growing this business and understanding where the opportunities lie for supporting investors. Can you just give us a bit of a take on what you do and what your day-to-day looks like?
Ben Handler: Yeah sure. Yes I'm responsible for the growth and the overall strategy in managing the entire operations of the CohenHandler group. We primarily operate in New South Wales, however we're doing a lot in southeast Queensland and a lot in Victoria at the moment. I really work closely with the buyer's agents within our company, so I really enjoy seeing someone, whether they're coming from whatever type of background, technology, transportation, construction or even if they're an ex-real estate agent. They will decide that potentially buying property could be a career for them and then I work very closely with our buyer's agents to turn them into very high performers. They also build very strong portfolios for themselves also.
Phil Tarrant: A lot of the discussion I have at the moment with buyer's agents is that there's no shortage of people that want to use a buyer's agency but finding good stock is hard. Is it hard to find good buyers agents, are they a pretty rare bread?
Ben Handler: Yeah it is hard. I guess the buyer's agent role is quite a specific type of personality and you've got to come across very trustworthy to the client. It's very different to the real estate side of things. If you're a real estate agent typically the persona is you're not very trustworthy, you're a bit like a car salesman. With the buyer's agency sector the way it's growing the client really needs to trust you. Like, really needs to trust you, so you've got to come across more as a consultant.
I guess, the types of buyer's agents that really flourish is, they're really strong at nurturing clients, they're very good at understanding clients requirements and objectives, especially for investments. They need to understand the longterm objective of the client and how they can help them achieve those requirements and objectives as they move through their investment journey.
Phil Tarrant: From what I understand, chatting with yourself and Simon, is that you've created a bit of an institute to help people become buyer's agents and that's cool. Here at The Smart Property Investment Show we are all for the growth sector. I use a buyer's agent for the purchase of my property, I'm a big fan and advocate of buyer's agency and I see the merit they provide. To have more, better quality buyer's agents in the market I think it's good for all Australians and all Australian investors.
That's good, but I want to have a chat about this sort of cultivation of buyer's agents and creating more buyer's agents. I thought the way to do it would be to talk about your journey because you're a property investor that became a buyer's agent. Now, as a buyer's agency you're helping other people transition from being investors to buyer's agents. What's your journey, what's your portfolio look like and when did you start investing in? What were the reasons why?
Ben Handler: Yes, my journey started I guess, I used to work at a company called Charter Hall it's one of Australia's largest property funds management and development companies. My entry into real estate started there. Then I bought my first investment property when I was working in the corportate world and then I left there and started investing myself and looking for a new opportunity. Then I thought how could I turn a career from buying property into a full-time style of job. That's how the buyer's agent role came about. Simon and myself, my business partner, we studied the buyer's agent business model in the US because around 86% of people in the US use a buyer's agent. We came back and started that concept in my bedroom and proved viable very quickly. We signed up our first client within a week. It was very difficult.
A lot of people, a lot of Australians weren't used to the concept of paying someone to help them find a property. It was like headbutting a wall for the first 12 to 16 months. Then during that time Simon and I were continuously building our own portfolio. For example, if we didn't have a particular client that a property we thought could suit them we would buy it ourselves. If we came across an off-market property, something that's not listed on the real estate portals because around 45% to 50% of stock in the eastern suburbs does not go online. It does not go on realestate or domain.com.au. We were obviously capitalising on those opportunities.
In terms of my portfolio, I've got 10 plus properties without going to the details. They range all across Australia and they achieve different objectives for me. It's been a really, really exciting journey. Then, obviously, now helping more of our buyer's agents within our company. Buy for more clients, and they obviously build their own portfolios is very rewarding for me to see.
Phil Tarrant: Without going into too many details in portfolio, normally I get investors that come on here to bare their soul across their portfolio, but I think we'll leave that to a bit of a later date. Is the way that you invest inherit in the way you use in the process and the system that you invest for clients via CohenHandler, is it one and the same?
Ben Handler: Yeah correct. We follow the same, good question, the same process and strategies and tactics. The ultimate number one key for me is speed. Speed is mission critical to buying property. A lot of buyers don't understand this well enough and a lot of our clients also don't which is why they inherently engage us. Speed is really about executing quickly when you find the right property. If you spend time taking too long during your due diligence or deciding is this right or is it not, the price just potentially goes up. There's other buyers putting in more bids, the vendors might not want to sell, the real estate agent becomes more cheeky. I think speed is really critical and that's what we follow.
Then we like to follow just very strict processes with numbers, we're very commercial, we don't buy into the whole emotion when we're building our portfolios for clients or ourselves. The numbers just need to stack up. Once the numbers stack and we're confident with the due diligence and it ticks all the boxes. We don't like to buy off the plan for example. We can't carry out effective due diligence. Not saying that it can't be successful, however we like to look at established buildings where we can really make good calls, good investment decisions.
Phil Tarrant: What do you think it takes to be a successful property investor? Those fundamental principles, is it buying under market value or is it buying blue tube assets, is it buying close to train stations? If you had to share three or four of your key tenements for being a successful buyer's agent, for anyone in investment property, what would they be?
Ben Handler: Yeah it's a good question. Number one, you need to choose ... This is what my perspective is, you need to make sure the building has low strata fees, low maintenance. If you're paying exceptionally high fees down the track it causes problems. Looking for buildings that are very low maintenance, low strata costs is really important.
Number two, I like to personally also look for opportunities where you can capitalise, add value. I'm talking low points to add value, not full renovations where you need to knock through walls, I'm talking about paint and even carpet. If you just apply some paint within a place and maybe new floorboards or a carpet it can dramatically increase the value. That's really important as well.
I also think, in terms of amenities like you mentioned, it needs to be in a location where it's easily accessible for people to, I guess, catch the train or any form of public transport or even just any form of shopping centre or something that's close by.
Phil Tarrant: You made the transition from being a property investor into a buyer's agent. Subsequent to become a buyer's agent you obviously deepened your property portfolio considerably. What was the hardest thing for you to do from turning from being an investor into providing those services for other investors as a buyer's agent? Was it an easy transition?
Ben Handler: It wasn't so easy. I found the taking my emotion out of it was quite challenging. I'll give you an example, if a client had engaged me to buy their family home moving outside of the investment space now, I would always sometimes put my emotion into it. If I felt like we were potentially overpaying I would tell the client, "I think we're paying too much." That is putting my emotion into it, because they may want to pay market value or even over to secure that property because it's their family home. Buying under value may not be an objective of theirs. That was quite challenging for me.
Then for investors I ... Some investors I found like I was putting forward my way to do it too much. Sometimes when I was dealing with investors that already had portfolios they had their approaches as well. Having a fine line with how to integrate each other's knowledge was also a challenge.
Phil Tarrant: I guess, being a good buyer's agent not all strategies ... There's many different strategies in the market, some people already have a current strategy that they want to continue with and they leverage a buyer's agents to support them find those particular assets that suit that strategy, whereas the other side of the fence is that you can work with a client, to actually help them develop a strategy and give them the backbone for approaching property investment moving forward.
With the way that you guys approach property investing, is the properties that you're buying today the same as properties you were buying when you first started? I.e. is it still the same bare bones type of principles associated with them, or has that evolved a lot?
Ben Handler: No, it hasn't changed, the fundamentals remain the same. We're looking for really solid, good buildings. If we're talking apartments here, we're looking that ... Squeaky clean, not many issues, as I said earlier, low maintenance. We're looking still in specific price points to achieve capital growth. We're not looking regional, we're not looking in spec-y areas, we're looking for low risk for our clients. The fundamentals don't change. We're looking for good aspects, good natural light, always just looking for what's always going to sell and how we're going to get that a capital appreciation, because the yields aren't great here. The yield's have actually gone south over the last four to five years. People in my opinion in Australia aren't buying properties for yields, a lot of people are buying it for capital growth. We've got to think about the future when we're making those purchases.
Phil Tarrant: I think we're fortunate we have a ready supply of budding property investors that want to become buyer's agents in this market. That's cool, that's the only way that this institute is going to grow and evolve. We want to track talented people into the property space, particularly the buyer's agent sector. If you're in the city market three, four years ago, five years ago, six years ago, you probably couldn't have done too wrong investing in property. My view on this is that you have a lot of people who think they've got the Midas touch when it comes to investment property and think that becoming a buyer's agent is going to be easy because they've got a great track record and they've already shown they can, done that. Do you see a lot of that considering the work you're doing with your institute to create new buyer's agents? Do you think there's merit in that or do you think we need to be careful about that? That buyer's agencies are, you're only as good as the last property you bought, right?
Ben Handler: Obviously a lot of people have bought property over the last five years, they've done very well. Not everyone, but a lot of people have done exceptionally well, some have doubled the value of what they've bought. Yeah, you could get lucky. I think a lot of people didn't realise what was going to happen in terms of the market. However, in order to be a good buyer's agent the difference is, you're working with a client. You need to have good emotional intelligence, you need to be able to offer good service. It's not about yourself, it's about them. You've got to understand different market places, you've got to have very strong relationships, the real estate agents.
If you'd bought one or two properties that did well, I mean, you need to then, when you're servicing a client, have all the agent relationships to make sure you can access pre-market stock, off-market stock, post-market stock, price reduced stock. There's a whole other ballgame when you're looking to become a buyer's agent. You need to be up-skilled, you need to understand why that building is better than that building. Why that street is better than this street. I think you really need to up-skill yourself a lot more if you want to then carry out that buyer's agent role.
Phil Tarrant: If you're a property investor now and thinking about becoming a buyer's agent, it might be one, two, three years time, irrespective of the job that you're working in right now, what should you be doing today to potentially prepare yourself for a career as a buyer's agent in the future?
Ben Handler: I think number one is market knowledge. Let's just say you are looking to focus in Sydney's northern beaches, you need to make sure that you've up-skilled yourself in the beaches' area, you know it back to front. You need to make sure you know all the real estate agents there. It's all about the real estate agent relationship, that's who you are effectively transacting with. If you've got those good relationships with the real estate agents they'll give you some inside intelligence regarding. That's what happens with what we do every day is that we get that intelligence from the real estate agent that, "Hey, the vendors are going through a divorce, they need a quick sale and let's wrap this up quick." A lot of the other buyers aren't privy to that, and that's what we capitalise on and leverage in order to get good outcomes for our clients.
You need to have good agent relationships, good market knowledge and need to have your process down pat. It's a bit like a musical, everything needs to flow. From getting your client to make a decision, to getting a signed contract, to getting your due diligence done on time. To making sure that the property, if it's an investment, it ticks all the boxes, it needs to flow very well.
Phil Tarrant: If you're again considering becoming a buyer's agent, how long does it take to actually start making good money being a buyer's agent?
Ben Handler: After six months we start to see buyer's agents producing a reasonable amount of money. Within our respective company the average take home after around 12 to 14 months is usually around $220,000 in GCI, that's Gross Commission Income. Then they've got to pay splits to the company, so they'll say they're left with around $120,000-$125,000.
Phil Tarrant: It's pretty good money, right?
Ben Handler: It's very good money.
Phil Tarrant: If you're a good buyer's agent.
Ben Handler: Very good money.
Phil Tarrant: If you're a good buyer's agent that means you've got a great ability to identify good stock and then find someone to secure that for and then actually negotiate that property very well then provide all the services after it. That's pretty much in a nutshell what a good buyer's agent will do. Have you seen many new buyer's agents fail or just not cut it? Does that happen very often?
Ben Handler: Not that I know of, no. We see a lot of buyer's agencies opening up, it's emerging a lot across New South Wales and Victoria where there's a lot of one-man bands who are setting up shop. It's low costs to set up your own business. We haven't really seen any groups fail.
Phil Tarrant: For these people who are new to being a buyer's agent and want to get going pretty quickly, what would be the first 30 days? What would it look like? Would it be finding clients, or would it be finding stock for clients, what do you think?
Ben Handler: You're always finding clients, so the prospecting never sleeps. That style of diligence doesn't go on holiday, that's 365 days a year. I guess, it's very much about, I think, sharpening up your sword and building your skills. If you're fortunate enough to work in a company with other buyer's agents, I'll say the first 30 days you're shadowing another buyer's agent. You're seeing how he sits in a meeting with a client, you see how he searches for a client, you see how he communicates with the client. I think you're starting to build your skills in that first 30 days, and obviously, yeah try and find your first client.
Phil Tarrant: You mentioned your experience over in the States a number of years ago. I can't remember the stats exactly, 80% plus. For our listeners, if you don't know the way purchasing real estate in America works, they have an advocate for the buyer and an advocate for the seller and those two people get together and sort it out and then money changes hands. In a very simple way, that's how it works. Every single buyer, and it will mostly ... Every single seller and mostly every single buyer will have a real estate agent, I.e. buyer's agent and a selling agent involved in that negotiation. Do you find that Australians are getting that, they're seeing the value in that? How quickly are we going to see the growth in buyer's agencies in Australia or Buyer's Agent Australia even get close to that? Is it possible to ever get to 80% of all transactions are going to be done by a buyer's agent?
Ben Handler: I think so. I mean, across Australia there's around 65,000 real estate agents versus circa 300 buyer's agents, so a huge difference. You know, to give you an example, when we started the business eight years ago trying to get someone to pay us money for our service was literally like headbutting a wall. It was very difficult, people did not understand. Fast forward now, our phone does not stop ringing. The way that technology's moving across this world through the Ubers through even Airbnb and through food delivery service and creating all this efficiency in people's lives, the monotonous process of people going online to search property hasn't changed. You've got to spend your Saturday's, your Wednesday evenings, leave work on a Thursday to look for ... At an open. People are not enjoying that process because technology's moving in so many other areas quick, so we definitely are going to see a huge more increase in the need for buyer's agents. We're already feeling it now, I mean the phone does not stop ringing.
Phil Tarrant: That's a good thing. Every one's obviously listened to The Smart Property Investment Show, but as I say with a smirk on my face. That's quite encouraging to me because to reference some comments I made, we like the idea of buyer's agents here at Smart Property Investment, we use one ourselves to grow our portfolio and we do share that along the way. That said, you don't have to use a buyer's agent for securing property. I think the majority of Australian investors still try to do it themselves. Obviously, we'll see a shift in that over time as more buyer's agents come into the market and investors actually realise the value. How do you generally deal, Ben, with the question around, "Why should I be paying you, I.e. buyer's agents for a service when I can do it myself?" Do you get that a lot still or is that minimising that particular objection to using a buyer's agent?
Ben Handler: We used to get it a lot. It was an everyday question, so we became ...
Phil Tarrant: Good at answering it.
Ben Handler: Pretty good at answering it. I guess, that the best way to approach this, we need to understand the client's, again, objectives. If they're time poor, hypothetically, we would solve that issue by giving back their time. They could then effectively have that time back and spend it with their family or wherever is best spent for them. If they've never bought a property before, the first-time buyer, I mean that's a different story. We'd be like, "Well, how do you actually expect to go about and deliver on this objective? You've never done it before." I think it comes down to, first and foremost, can we solve the problem that they're facing? If we can't solve it then we may not be the right fit for them and we'll tell the client that, "Maybe you should do this yourself." If we can't add value and we're not going to engage with you. It's not for everyone the service.
Phil Tarrant: It's not for everyone, but would you say that just because you use a buyer's agent doesn't mean you outsource responsibility for the investment, right? It's still encumbered on the investor or the person if it's an owner-occupied house to say, "Yes, I agree with the advice and information I've given." And, "Yes, I agree to buy in that property." It's still encumbered on the person buying it to be responsible for the purchase.
Ben Handler: Yes. They're totally responsible and accountable.
Phil Tarrant: Yeah. That's a bit of a misconception I think that a lot of people have with buyer's agents. Encouraging to see a lot more people using them but it doesn't mean that you outsource all responsibility for an investment. You need to be involved in buying properties not passive, you need to be very hands-on, and particularly if you're new to investing. I'd be looking if you choose using a buyer's agent shadow them and understand and learn from them because there's a lot to learn. There's a lot to learn.
Getting back quickly to this institute you've created to try and build more buyer's agents. It's a good initiative and I want to see this whole tide rise. What does that look like? Is it like a modular-type thing where you do a whole bunch of programmes? Can you tell us about it?
Ben Handler: The Buyer's Agent Institute, it's an online five week elearning platform. The reason why it came about was, number one as I said earlier, there's only 300 buyer's agents in the country. Within our current business CohenHandler, we're the largest in the country, we still couldn't grow it enough. We're thinking we can't fulfil this objective to grow it so why don't we create a course, share our IP, share our sales process, share how to win customers, share the searching process. Everything that you need to know to become a superstar buyer's agent. Why don't we share it so then people can start their own businesses, they can work for our competitors. Just how do we grow the industry? That's how the idea came about.
Then also we'd received so many phone calls from people from all different areas like every different sector had called us to say, "I love buying property, how do I turn it into a career?" I mean, I think we got sick of just having that conversation with people, so we put it into a course. I had someone recently who was a labourer in Queensland and his joints got too sore and he's on leave at the moment and he couldn't actually carry out his role anymore and he loves buying investments. He's enrolled into the course. He's going to look to buying property into a career and become a buyer's agent. It's for anyone.
Phil Tarrant: How to you know if you've got a good buyer's agent or less than good buyer's agent because they're not all created equal?
Ben Handler: The good buyer's agents put their client first, first and foremost. They are very client centric. They actually really know the property they're talking about. A lot of buyer's agents who focus on investment, they need to ... A good buyer's agent to an average buyer's agent, the good one will understand exactly where to buy. They will know buildings, they will know streets, they will know everything. I feel like it's all about the best buyer's agent has the best understanding of their market.
Phil Tarrant: A buyer's agent is an advocate of the buyer not of the seller. Should you be asking your buyer's agent how they're getting paid? Is that an important question to ask?
Ben Handler: Yeah, it's a very good question. Yeah, so the buyer's agent does get paid from the buyer. It's very important to know that there's slightly a misconception that real estate agents work for the vendor. A lot of buyers when they haven't got a buyer's agent they're negotiating with a real estate agent. They actually forget the real estate agent under law is obligated to get their vendor the highest price, not you as the buyer. When you engage with a buyer's agent you are paying the buyer's agent a fee, but the buyer's agent is solely representing your best interests.
Phil Tarrant: Okay. If the buyer's agent's also getting some sort of commission from the person selling a property, if it's off to play them apart, is probably not a true buyer's agent, is that fair?
Ben Handler: Yeah, that's not above board, you can't be taking out a commission, or you shouldn't be taking other commissions.
Phil Tarrant: You shouldn't be taking other commissions.
Ben Handler: Be wary.
Phil Tarrant: Yeah, be aware and ask those questions. No, it's really good, Ben. Is there a website for the institute?
Ben Handler: Yeah, so it's the buyersagentinstitute.com. It's an Australia-wide platform. It's scaling quick, it's moving at a phenomenal pace. I think it's just amazing to see people from all different industries who didn't even know buyer's agents existed and they love buying property. Here they can now build their own portfolio and then obviously earn an income for representing clients as a buyer's agent.
Phil Tarrant: It's good. I haven't looked at him, I'm going to have a look just to see what you guys ... I'm not going to become a buyer's agent, I've actually got a day job doing this. It's a good initiative and anything at smartpropertyinvestment.com.au that we can do to support growth in this area. For me, it's all about ensuring investors make the best investment decisions possible and a lot of that comes down to information, research and understandings. For some, investors, the buyer's agents, the best bet. I'm going to check it out and have a look. Let us know how it goes.
Ben Handler: Absolutely.
Phil Tarrant: Even if you've got some graduates who have done it and are happy to come onto the show and share their story I'd be keen to get into the psyche. For many people to actually jump ship from an often well paying stable job into self-employment as a buyer's agent, the realisation of they might like ... If you follow real estate I'm going to use these guys. One of his sayings, a guy called Tom Panos, every job has two jobs, right? You might love buying property but you need to find people to buy property for and that's the second job. That's often the hardest bit for people moving into a role like this.
Ben Handler: Yeah, correct. That's another objective of why we started the institute was because if you are looking to quit your career or you're currently looking to start a new career and you're out of work, a lot of people jump into real estate because they think it's easy. The entry point is easy, you can get a real estate licence in days, a certificate in one day, but then you've actually got to do the job. Like you were just saying, you've actually then got to do the work. This course actually outlines what work needs to be done so then you can understand that and decide do you want to do this, do you want to sign up for this?
Phil Tarrant: Okay. I hope there's some hard truths in there as well, because there needs to be.
I've really enjoyed that Ben. Let's keep connected, let us know how you're going and please do let's get some graduates on. Let's have a chat.
Ben Handler: Yes, thanks so much.
Phil Tarrant: Nice one. Remember to check out smartpropertyinvestment.com.au if you're not yet subscribing to our morning market intelligence. You're the first to know what's happening in property. Smartpropertyinvestment.com.au/subscribe. If you like social media and that's where you like to get your information, just search SmartPropertyHQ. Any questions for me or Ben or if you're interested in becoming a buyer's agent I'm happy to pass on your details to Ben. [email protected] Flick it over. If not, what's that website again?
Ben Handler: Www.buyersagentinstitute.com.
Phil Tarrant: There we go. Thanks Ben, thanks everyone. Thanks for tuning in, we'll be back again next time. Until then, bye-bye.
Announcer: The information featured in this podcast is general in nature and does not take into consideration your financial situation or individual needs and should not be relied upon. Before making any investment, insurance, tax, property or financial planning decision you should consult a licenced professional who can advise whether your decision is appropriate for you.
Guests appearing on this podcast may have a commercial relationship with the companies mentioned.
About the Blogger
More from this writer
- Investor reveals how to find the perfect property manager
- SPECIAL EPISODE: Phil and Munzurul talk steering the growth and development of portfolios by managing cash flow
- Q&A session with Paul Glossop – more questions answered!
- Investor reveals the opportunities for migrants in Australia
- How ice addicts potentially ruined an investment