typical career path top lo opens a new company lack of business training especially with p&l’s
TRANSCRIPT
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Typical Career PathTypical Career Path
Top LO opens a new company• Lack of business training
• Especially with P&L’s
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WHY OTT?One Transaction Thinking
WHY OTT?One Transaction Thinking
• Because I wasn’t smart enough to be able to read financial statements
– I spent over $4,000 in seminars trying to learn
• I needed to react quicker in market swings
• Allows me to read my P&L in minutes
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Mistakes I MadeMistakes I Made
• Former internal accountant misallocated 1 loan– $127,000 error…created huge amount of
financial stress– He was managing my books, why should I?– I was detached from my financials. OTT
reattached me.
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Revenue versus ExpenseRevenue versus Expense
• Revenue determined loan by loan
• Expenses come in lump sums
• Exercise–Pick a loan “How much did you make”
How much was your last payroll?
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The accounting world has taught usThe accounting world has taught us
Expenses
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Common Sense…..Common Sense…..is not “That Common”!is not “That Common”!
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Definition– It combines monthly closed loan reports with P&L
broken down to one transaction
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• Think in approximate numbers
• Needs numbers now to run the business
• Think Financials and Productivity
• Think in exact numbers• Wait to publish P&L info
until it’s perfect• 60 days is quick• Think Financials only
AccountantsAccountants EntrepreneursEntrepreneurs
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The Mortgage BusinessThe Mortgage Business
• Changes occur very quickly– Rates go up refinances go down etc.
• Owners need information now to react
• Revenue per loan fluctuates
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Entrepreneur’s CompensationEntrepreneur’s Compensation
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Entrepreneur’s CompensationEntrepreneur’s Compensation
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Entrepreneur’s CompensationEntrepreneur’s Compensation
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Entrepreneur’s CompensationEntrepreneur’s Compensation
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Numbers and CapacitiesNumbers and Capacities
• They go hand in hand
• If you don’t know the numbers… – How do you know whether you need more out of a
processor?– More or Less Processors?
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Basic Mortgage Accounting Basic Mortgage Accounting
• Chart of Accounts– Only need to see what you want to track
• Focus on Income Statement– Balance Sheet is more complex
• Creating a cheat sheet for all the numbers– OTT vs. the 55 gallon drum of numbers– I can remember processing costs should be around
$130
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Two Crucial ElementsTwo Crucial Elements
1. Combining the closed loan production with your P&L
2. Timing of the data-Entrepreneur time
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Timing is CriticalTiming is Critical
• I used to wait 45-75 days for numbers– Too late, the market changed
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Future Decisions Using OTTFuture Decisions Using OTT
• Rent Analysis– I pay $144 a closed loan for rent– I look into a different location
• I run the OTT and find out I will go to $294 per closed loan
– Can I afford to add $150.00 per closed loan for the new space?• This comes right off of profit
– Will the new location increase closed loans?• $$$ per closed loan (higher loan amounts)
– My ego needs it. I will sacrifice the $150.
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Future DecisionsFuture Decisions
• The rent decision was made based on a crystal clear view
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Why Companies Lose MoneyWhy Companies Lose Money
• Capacity/Production Imbalance– Rent
• Space for 30 only 15 employees
– Phone system• Phones on each desk not all desks are full
– Ops Salaries• Staff for 400 loans only doing 200 loans
– Managers Salaries• 4 managers managing 3 people each
– Copy machines• Pay for 50,000 copies per month only doing 25,000