Vince’s Lessons as a Broker, Part 1
by Tony Chavira
After ten years as a safety director for a Fortune 50 Company, and several years in the auto industry, the time felt right for Vince to begin looking for new ventures. Although the job paid incredibly well, the hours were terrible. Some workdays would last for 16 hours, and when you have two young kids, somewhere deep inside you have to know that’s no way to be a father. In Vince's words, “Not all money’s good money.”
So he gave his two weeks and decided to try his hand at being a mortgage broker. He had worked in the past putting deals together for the auto industry; the way he saw it, it would be largely the same with larger sums of money. Working out of his home, Vince structured his company, got set up with a loan processor in Arizona, and eventually employed a group of 34 loan officers to broker deals in 45 states. The loan officers would bring Vince deals and make 80% of the commission, the processing company would make $750 per deal, and Vince would take the remainder. The checks were cut when the buyer closed, and the team would move on to the next deal. And since it was 2006, deals were constantly closing all over the country.
For a long time the only way to get a broker’s license was to go through the Department of Real Estate. First you had to take the test to become a real estate agent. Then you had to spend two years as an agent. Finally, you had to pass another test to become a broker. Today, this process is set in stone, but back then there was a back-door method that didn’t involve the wait time: Vince was able to able to get his broker’s license through California Department of Corporations. All he had to do with prove his net worth (which was more than $200,000), provide his credit score (which was about 800), and show that he wasn’t a felon (which he wasn’t). The Department of Corporations gave him his license by the end of the month.
Vince started wheeling and dealing right away. He even began to negotiate deals on big properties of his own. He had negotiated deals on homes before, his first in Inglewood in 1990, and a larger, better one in Downey in 2003. In 2006, with money pouring in), he bought ten properties in Lansing, Michigan (he's originally from Michigan and has family there), and in 2007 he bought a rental property in Simi Valley. And in the middle of 2007 he bought his first million-dollar home up Crenshaw, with a view from the hills that would blow you away. He knew he was doing something right, since it had only been a year since he started. He felt comfortable purchasing all the creature comforts his family could want. Closing on the $1.1 million house on Crenshaw had earned him $150,000, on top of the money he was earning from his agents.
But when the economy collapsed, so did a lot of other things. Obviously, the deals stopped coming in. But Vince had not expected the housing market’s crash to so affect the job market. Suddenly, his renters across the country could not make their payments. Bills kept adding up, and Vince kept paying them down with his business’s profits, until finally there were none left. Worse, there was no way to sell his properties unless he wanted to walk away with an immense debt. Over the course of eight months, everything he had built up was gone, as quickly as it had come.
When you see yourself as your family's provider, it’s hard to accept being affected by circumstances you can't control. The stress put Vince on the defensive, and he considered going back to his old job, only to discover that the Southern California auto industry wasn’t there anymore.
By 2008, Vince was on the verge of losing his family home in Downey. He applied for the Federal Mortgage Modification Program and was accepted under the stipulation that he worked some kind of job, to determine what his new payments should be. Vince took on jobs as a desk attendant and as a night club bouncer while he and his family re-evaluated the way they used money. Hard times had come and forced them to confront their roles within the family, their expectations of each other, their interactions, and the way they communicated.
Were he able to do it all over again, Vince wouldn't have bought all those properties. He would have saved the $150,000 from the deal for the house on the hill. He would have invested every dime he made.
The day I met him for an interview, Vince was beginning another high-paid job, brokering deals for cars. He recently bought a toy company, which he and an associate are restructuring. He's been up and he's been down, and his relationships and self-confidence are stronger than ever.
Next week, Part 2 of Vince’s story will discuss his brokering business, which deals were brokered and how, what went wrong (aside from the world economy collapsing), and the price of doing business.