Successful real estate companies, credit unions, banks and mortgage companies have business plans.
Most plan for the next week, the next month, the next quarter, the next year and almost all of the great ones plan for the next five years and beyond. These five-year plans are more about positioning for change and being ready to adapt to the ever-changing market for real estate, banking and borrowing.
New technology, interest rates and consumer needs will be different in two or three years so a business plan must be flexible and based on predictive mathematical odds and demographics.
What will be the hot new financial product in a couple of years? What will be the most effective way to retain clients and gain new ones over the next five years?
I predicted in 2020 that the reverse mortgage business would increase for my branches from one loan per month to four or five per month by now but I was wrong. My team is still 99% conventional, VA and FHA buyers and borrowers and only 1% home equity conversion lines of credit and fixed-rate reverses.
Every reverse we have ever closed has been rewarding and in some cases, life-changing for our clients, so why was I so off in my business plan expectations?
I think I know the answer. It’s because, like me and everyone I know, pretty much nobody likes borrowing money, and those of us 62 and older are conservative and have a tough time trusting large Wall Street lenders.
We are still going to offer the FHA-insured reverse mortgage lines of credit, but I am no longer going to be spending marketing and advertising money on this until it becomes more accepted and popular.
I am also hoping the FHA will reduce the cost of their mortgage insurance on these products so more financial advisers can endorse the idea for those seniors with tons of equity and a need for a larger tax-free monthly cash flow.
Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.