How To Get Rich Doing Mortgages

I have to come clean.

I played the $590 million Powerball last week.  (I didn’t win).

It was probably the 3rd time in my life I ever bought lottery tickets.  With those exceptions I never play the lottery for two reasons:

1) Just like I expect to succeed and win in everything I do, I actually expect to win the lottery and that’s just dumb (but I can’t help it);

2) I feel like a loser.

That might sound harsh but I’m being honest.  I’m not passing judgment on serial lottery players – I’m speaking for myself – but wouldn’t you agree there’s A LOT of people banking their retirement on winning the lottery?

It’s ridiculous.  Somewhere along the way the American values of hard work, discipline, perseverance and self-belief were lost for many people.

The bottom line is, if you’re going to get rich, it’s up to you.  It’s up to me for my family and you for your family.

So let’s do it!  Let’s get rich.  I mean, we’re going to be here anyway, right?  We’re going to spend our time in the mortgage industry anyway for perhaps the next 10, 15, 20 years or longer, so we might as well make ourselves a fortune.

If you’re with me, then read on to learn how to get rich in the mortgage industry.

3 Steps To Getting Rich Doing Mortgages

First of all, we all define “rich” in different ways.  We can be broke financially but still be rich.  So let’s get specific: I’m talking about financial freedom rich.

My definition of financial freedom (from Robert Kyosaki’s Rich Dad Poor Dad book): Your passive income > monthly expenses.

Passive income means getting paid over and over again from efforts we put forth one time in the past but continue to pay dividends now and into the future.

There’s a lot of ways to create passive income and in this blog post we’re talking about financial leverage.  Meaning, the return on our money from financial investments.  (I happen to be partial to buying investment property but for the simplicity of this scenario, let’s just focus on financial investments).

So in order to invest a bunch of money we have to make it first.  And if you’re reading this you chose the mortgage industry.

I’m not a financial advisor and this is not financial advice and of course you should consult a qualified financial advisor and accountant, but here is a plausible scenario that in my book would make you rich.

Let’s say you currently have:

  • $20,000 in unsecured credit card debt
  • Monthly household/business expenses of $8,000 – this includes private school for 2 kids, putting money towards your kids’ 529 college savings plan, credit card payments, mortgage, car payment, fine dining and a little travel (from experience I think this is pretty realistic)

Let’s say your goal is:

  • Pay off your debt
  • Earn $20,000 month in income (before taxes)
  • Save $2 million dollars for retirement (making you rich)

Step 1: Build a $20,000/month income (before taxes)

Let’s assume $150,000 average loan amount and 150 basis points earned for an average commission of $2,250/deal.  Here’s how to do this:

  • Prospect 200 realtors, bankers and builders over 6 months; convert 10% of that list into referral sources
  • Implement a weekly follow up plan that cultivates 20 producing referral sources (perhaps 15 realtors, 4 bankers, 1 builder rep) who deliver a grand total of 50 leads/loan applications each month
  • Convert 20% of your monthly loan application pipeline to closed loans = close 10 deals/month = $20,000 + income/month

Step 2: Save and invest $5,000/month for the rest of your mortgage career

  • Put aside $4,000/month for taxes (20%)
  • Pay your monthly bills of $8,000/month (40%)
  • Put aside $5,000/month towards savings/investments (25%) (Pay off your $20K in credit card in 4 months first, then put that $5K/month towards savings/investments; this will lower your monthly bills and increase cash flow)
  • You still have $3,000/month (15%) left over for other things you want to save for like a new car, house renovations, security fund, philanthropy, etc…
  • Invest your $5,000 @ 8% for 10 years = $915k; 15 years = $1.7million; 20 years = $3million

Step 3: Pay off your house in 15 years; pay cash for cars; take on no cc debt

Voila!  In 15 years, you’ll have saved $1.7 million.  You’ll have 0 debt.   If you’re earning 8% annual rate of return on your savings, you’ll generate $136,000 annually income or $11,333/month!

The coolest part?  You get to maintain your lifestyle and you now have passive income that is greater than your monthly expenses.

You are financially free.  You are rich.

Getting rich isn’t rocket science.  It’s math.

And the pathway to getting rich is what you’re great at: building relationships.  Go out and build 20 solid relationships with producing realtors, bankers or builder reps and you are now living this dream.

Follow up, keep in touch, become friends, execute well, replenish your lead sources and you’re on a trajectory for financial freedom.

Got bigger expenses or you want more wealth?  Add 10 more realtors to the mix.

Remember, you’re going to be in the business anyway, so you might as well get rich!

I’d love to know what you think.  Are you inspired?  Is this easier than you thought?  Harder?  Are you already doing it?  Leave a comment and let me know.

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    4 years ago

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