When mortgage lender LoanDepot first took a shot at going public in 2015, the company pulled the sale just hours before it was set to launch.
The reason, most analysts believe, was that another financial technology startup was experiencing falling share prices in the wake of a very similar IPO. Interestingly, six years later in the middle of a global pandemic, the company believes the “headwinds” against it six years ago are definitely gone now.
“We chose to enter the market at a time when few were willing to take the chance and even fewer were succeeding,” said CEO Anthony Hsieh. His company is now the second-largest non-bank originator of retail mortgages in the United States, boasting a market share of 2.6 percent of the approximately $11 trillion U.S. mortgage market. The company has more than 10,000 employees and generated $1.47 billion in net income during the first nine months of 2020.
LoanDepot’s current success can be credited, in large part, to its determination to help would-be homeowners access mortgage products during the pandemic, including taking advantage of cheaper borrowing costs sooner and more effectively than the competition. “Despite the headwinds originally against us, we had a vision, and we never lost our focus,” Hsieh said. Although Hsieh met an untimely end from injuries incurred during a housefire in November 2020, his history of founding strong, profitable businesses like Zappos and LinkExchange appears to be keeping LoanDepot on track in the wake of his death.
LoanDepot has filed to raise $100 million in its IPO, although most analysts agree that the number is a “placeholder” and will likely change in future filings. The filing may be intended to enable one of the company’s investors, Parthenon Capital Partners, to exit the relationship. However, the amount that Parthenon owns is currently undisclosed, and that is speculation rather than fact.
Despite the ongoing financial turbulence throughout the economy in 2020, 2021 is likely a perfect time to LoanDepot to take a second shot at going public thanks to the American population’s determination to buy homes from home during the ongoing COVID-19 pandemic. LoanDepot “checks all the boxes” for a company likely to grow and thrive despite lockdown orders or stay-at-home mandates; it offers loan products via a mello smartloan platform that streamlines the entire mortgage process while still offering FHA, VA, jumbo loans, and conforming mortgages. On top of the digital platform, LoanDepot does have a branch network.
Real estate investors should take a cue from LoanDepot in 2021. Am I saying you should take your operations public? Not necessarily! But I am saying that real estate investing is going to be one of the strongest and most recession-resistant sectors available for years to come because our entire national perspective on homeownership and what living locations are desirable has changed in the past 11 months. Do not let fear of economic turmoil keep you from investing and securing your financial future.
Charles Sells is the founder and CEO of South Carolina-based boutique investment firm Platinum Investment Properties (PIP) Group. He has been investing in the southeast and in other attractive markets around the country for more than two decades. Get more market insights and trend updates or request a free consultation at PIPGroup.com.