November 15, 2018

Balancing Act: LSSMC’s Hinricher Outlines a Plan for Mortgage Success

Yet  another informative piece by a Lucky Striker being featured in a national publication.This time, Ryan Hinricher of Investor Nation provides an excellent overview on creating a healthy balance of income streams in the mortgage business. Makes me wonder what the equivalent model would be on the real estate broker/agent side of the equation… Read on:

Build a Bust-Proof Business: Diversification breeds resilience in a volatile mortgage market

Excerpted from the Scotsman Guide’s Residential Edition, February 2011.

Boom & Bust #1The recent housing crisis left many mortgage professionals fleeing for other professions. In some cases, these same people experienced extreme prosperity during the subprime- and alternative-mortgage boom. For many brokers and originators still in business today, the famine that followed the feast is now a distant memory for one reason — refinances.

Riding the cycles of boom and bust, however, is no way to live. You should instead strive to create a consistent and bust-proof business. Doing this requires minimizing downside risk and reducing volatility.

Huge swings in the mortgage industry often occur because its closest friends are also its bitter enemies. These enemies aren’t people but rather interest rates, legislation and the larger housing market.

To use those shifts and their outcomes to your advantage, you must build a diverse business model. In the past, diversifying your investments meant buying a variety of stocks and balancing those holdings with bonds and, in some cases, commodities.

The problem, however, was almost everybody followed that same strategy, and investments started rising and falling in unison. Today, smart investors often bet against certain parts of their own portfolios, thereby hedging and minimizing downside risk. Mortgage professionals have this same opportunity.

You can do this — and build a bust-proof business — by refusing to place too much emphasis on any individual market segment.

Ryan goes on to explain how a balanced portfolio for the mortgage industry would include refinancing, investor loans, new construction, first time home-buyers and reverse mortgages, but to get the detailed goods on his plan, you’ll need to read the full article here.

 

About the publication: Scotsman Guide Media’s mission is to be the leading media provider of key resources and tools for the mortgage origination industry.

Comments

  1. Joey Ciurleo says:

    Great article, Ryan. During the boom, it was an effective strategy to brand yourself as a “specialist” in a particular mortgage area. Today, there’s just not enough business out there to do that. Diversification is the key, and it means new avenues of exploration for many mortgage professionals who have decided to stay in the game. Commercial lending, hard money and reverses are perfect examples of diversification of product that will payoff now and in the long run.