Industry Spotlight - Michael Schumacher

Industry Spotlight:

Michael Schumacher

President, Enact Partners

Michael Schumacher, Enact Partners

Originate Report: How have you seen Enact Partners grow and expand in the last few years?

Michael Schumacher: Like many in our space, we’ve seen significant growth over the last several years as a result of favorable economic conditions. However, we also have a great team that works hard every day to judiciously execute our business strategy. This combination has allowed us to maintain steady growth in terms of assets under management while deliberately scaling our infrastructure for future growth.

OR: What has been one of your biggest successes and one of your biggest failures in your career?

MS: My biggest career success has been helping to build our great team at Enact Partners. And I mean we have a great team. Personally, I’d be hard pressed to lay claim to any success or idea that was exclusively my own. They’ve all been an adaptation that came from others sharing their ideas, talents and experiences.

As for failures, I’ve made plenty of mistakes in my career and I will certainly make many more. I don’t see my mistakes as failures; they are great teachers and the only real failure is not seizing the opportunity to reflect and learn.

OR: From your point of view, what is the most compelling reason to consider starting a mortgage fund?

MS: The fund model is compelling to us primarily because it’s compelling to our investors and our borrowers. If it wasn’t, we wouldn’t have done it.

For our investors, it simplifies their life, gives them more control and less administrative hassle as compared to a loan-by-loan model. While both models have merit, the fund represents an opportunity for investors to compound growth by reinvesting their monthly proceeds, keeping their money working consistently, diversifying risk, consolidating reporting and streamlining paperwork and their taxes. Having a third-party audit also gives them comfort and confidence in the health of the company and its investments.

For borrowers, speed and certainty are important. Borrowers take comfort in knowing the dollars they’re counting on are already in the bank and the deal can be closed without delay.

OR: What is something that most people don’t know about your company?

MS: Most people don’t know that it started through personal investing. A friend of mine had been investing in trust deeds for many years and introduced me to the concept. I was a commercial land developer and investor at the time and thought it sounded fun and interesting. After some research, I invited another investor friend to split the first loan with me. The loan went well, and a third and fourth friend wanted in on the next loan, and so on. That fourth investor friend, by the way, is Aaron Roth who has been my business partner from almost the beginning. Today, our business continues to grow organically through word-of-mouth, just like it did at the start.

OR: How has your company vision evolved from Day 1 to Today?

MS: Candidly, when I started investing in trust deeds with some investor friends, there was no vision. I wish I could say it was more deliberate but it wasn’t. It’s like how garage bands get started. I had a common interest with some friends who wanted to invest in something tangible and avoid the volatility drag attributed to Wall Street’s financial products.

Once we realized a broader audience appreciated our product, the vision changed dramatically. I still think this industry is fun even though we moved out of the garage long ago. Today, we are sharply focused on creating the best product and experience we can.

OR: What are some of your goals for 2019?

MS: Some of our 2019 goals include smoothly transitioning our investors into the fund as existing loans mature, and upgrading our technology infrastructure to better serve our business. We’re also planning on adding a loan originator or underwriter to our team. Know any?

OR: What does success look like for you?

MS: Success is a stable loan portfolio, regardless of the real estate cycle. Success is when our investors trust us enough to introduce their friends and family. Success is when a repeat borrower calls us for help financing their next project.

OR: What is one piece of advice you have learned and carried with you throughout your life?

MS: Spend the time to truly understand the perspective and goals of others first.

OR: What mistakes have you seen others make in this industry? How does Enact Partners avoid making those same mistakes?

MS: I’m seeing some companies loosen their underwriting standards due to increased competition and decreasing yields. It’s hard for me to say if this is a mistake or not; time will tell. Regardless, it’s not a trend we intend on following.

OR: What advice would you give to someone who is trying to raise capital for a mortgage fund?

MS: If you are in a place to seriously consider a mortgage fund, then you’re already doing something right. Stick with what you do best and design the fund in a way that serves the investors first, not the Manager. And don’t change your product just to attract new investors; if you take good care of your existing investors, others will follow.

CONTACT: Michael@EnactPartners.com www.EnactPartners.com | 760-450-7017