"There's a lot of entrepreneurialism in mortgage, but it's hard to do something different"
Not all entrepreneurs are on a mission to reinvent the wheel. Sometimes, it’s about finding the right wheelmakers and partnering up with them, said John Beacham.
Beacham is the CEO of Toorak Capital Partners and one of the two people from the mortgage industry named by Ernst and Young among New Jersey’s entrepreneurs of the year.
“I think there’s a lot of entrepreneurialism in the mortgage industry, but it’s hard to do something that’s really different,” Beacham told MPA in an exclusive interview. “The nature of capital-intensive business, like mortgage, is that what we do is we provide commoditized products. So, whether the single-family loan is made to the standards of Freddie and Fannie.. there’s a pretty standardized way to make more juice in the country.
“What’s really unique is the opportunity to sort of create something new. So, we fit in between residential and commercial, where we’re commercial for the purpose of the loan. We only found residential investors in the sense that we’re finding residential property. So it’s kind of a hybrid of the two good market segments.”
Beacham explained that these sectors had almost no institutional capital before. “We started in 2016,” he said. “There was almost no money in this space to go fund lenders, and the lenders that we were dealing with would literally make a loan, and they’re sold to doctors and dentists. They may have a small fund, or they have their own money and lend it out themselves or whatever. But it tended to be on a kind of smaller scale, very local capital. That was institutionalized. It wasn’t standardized at all.
“And so, what we did is we changed that whole dynamic and coming in and saying, ‘hey, you know, we’re good at raising capital. We’re good at the capital market side of the business. You guys are going to be lenders’. We partner up together and use our capabilities to get good, reliable, consistent funding to enable us. I think that’s what’s unique about this industry. It was fundamentally changing from something that is very Mom and Pop and very local to something that was nationalized.
“That enabled an opportunity to actually create something new and re-envision the way this industry has really operated. And I’m really proud of the impact, in addition to the numbers. It’s really rewarding to see all the families that we financed.”
Watch Beacham’s full MPA TV interview here: Has the housing sector downturn been a surprise?