Building a mortgage business is never easy and making it a family affair has both its perks and pitfalls. Working in a family business is both rewarding and at times difficult, especially when those work conversations spill over at the dinner table.
You need to have a plan for when things get tight. After all, it’s not easy to fire family even if the business is going under.
Family mortgage businesses say setting boundaries is also extremely important.
“When we are together outside of work, we focus on having a good time and very rarely discuss work related items,” Greg Middleman of Freedom Mortgage says. “In the work environment we may briefly touch on personal matters from time to time, but for the most part we keep it professional.”
But it’s not always that easy.
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Jean and Dhiane Machado’s Tower Home Loans, based in Reading, Mass., is built upon the foundations of family being first, which oftentimes means that the couple’s personal lives and business are often intertwined — especially since the business is both of their livelihoods.
“We’ve learned how to work together. We’re good partners together, in business and in life,” Dhiane says. “I think one challenge for us is leaving work at the office. Sometimes we catch ourselves at home talking about loans and we have to stop ourselves.” Jean added, “It’s important to separate work and family and learn to compartmentalize the two. We don’t fight ever, especially not about business.”
Family businesses may struggle with boundaries between the business and time outside of work, says George Haynes, a co-author of Family Business Research: Reviewing the Past, Contemplating the Future, but many tend to be more thoughtful in their business plans and intentions.
“Some pros of family businesses is that ownership usually embodies the whole rather than the self,” Haynes says. “Families who run businesses together are more apt to make smarter decisions regarding their finances or investments because they know their relatives are affected by said decisions. Family businesses also embody the concept of leaving a legacy so there’s special care to ensuring the longevity of the business.”
“Some pros of family businesses is that ownership usually embodies the whole rather than the self.”
> George Haynes, co-author of Family Business Research: Reviewing the Past, Contemplating the Future
What often holds family businesses back, Haynes says, is the uncertainty that is ultimately attached to combining a business with relatives.
“Many family businesses have risk attached though, if the business goes under the family goes with it,” Haynes said. “Also, to curb risk, there needs to be a balance struck between family matters and business. Oftentimes families who get caught up in the business side of things forget about providing for the family members working for them, with stuff like health care and benefits.”
He says the biggest challenge for family businesses is the intermingling of a family’s personal finances with the business finances.
“It’s important to separate out the two because the subsidization of the business separate from the family’s own finances needs to be clear,” Haynes says.
Jean and Dhiane Machado owners of Tower Home Loans.
Not Alway A Clear Path
The path to a family business is never a straight line.
Patty and Rick Arvielo are entering their third decade of being partners at work and as a family, and the couple considers New American Funding (NAF) like another child to them. “We love each other and our family first, but a close second is NAF. [Rick and I] are just aligned as a couple and as business partners,” Patty said. “Our strengths and weaknesses are extremely different, so he’s great in areas that I’m not great in and what he’s not good at, I’m great at.”
Stanley Middleman, who started Freedom Mortgage in 1990, says he didn’t anticipate his sons, Greg and Michael, expressing interest in the mortgage business. But that’s what happened. “Each of my sons in their own way and at their own pace have demonstrated the ability to be great steward of the business that I created,” Stanley said. “Working with me at Freedom Mortgage, I feel they care for, are responsible for, and have further nurtured my company as if it were a younger sibling with its own needs and support. Seeing them as the children you take care of, and love is totally different from seeing them as adults and business leaders.”
“We’ve learned how to work together. We’re good partners together, in business and in life.”
> Dhiane Machado, co-owner, Tower Home Loans
Patty describes NAF as being a family-oriented business — even for those not considered blood family. “My ex-husband works for NAF and he’s been with us for 10 years,” Patty says. “Even though our company is big, relationships are a huge part of it. Family can also be extended to the people you choose; many of our friends work at NAF, including my high school best friend who is in charge of our FHA insuring. My sister’s ex-husband also works for us! We have a ton of nepotism, but it just attests to us nurturing our relationships and turning to our inner circle to uplift others.”
Head Not Heart
At the end of the day, Rick says that the business has to be approached by following his head, not his heart. While the couple both agrees that bringing their inner circle into the business has been a blessing, that’s not to say it hasn’t brought them challenges. “When it doesn’t work out [working with family], it can be heartbreaking,” Patty said. “When I had to let my best friend go from NAF, it felt like a divorce, and I had to navigate how to separate the business from the relationship. While the friendship did eventually endure, it took a lot of work to accomplish that.”
Rick’s more logical approach is to let business be business. “You have to treat the business as its own entity and always do what’s in the business’s best interest, even when it’s hard,” he said.
Patty and Rick Arvielo, who are entering their third decade of being partners at work and as a family and the couple considers New American Funding (NAF).
While families may benefit from the legacy and familiarity of working together, they must also navigate the risk of family dynamics, the tension of personal and professional relationships, and the financial risks associated with the mortgage industry.
Also, it’s smart in a family business to make sure there is some professional experience elsewhere. Make sure family members are capable before onboarding them.
Greg Middleman didn’t jump on board with the family business immediately. “The best decision I’ve ever made was working outside of Freedom Mortgage. My past experiences outside of [the company] have enabled me to work through difficult situations on my own,” Greg said. “However, I’m lucky I can reach out to my brother and father in difficult situations. My brother joined about six years before I did, so he has already gone through a lot of the challenges that I am seeing now in working in a family business.”
The challenges that Greg says he’s facing include avoiding special treatment and practicing professionalism. “The biggest challenge [about] working in a family business is figuring out how to avoid getting special treatment,” he said. “In order to grow and reach your full potential, you need to be held accountable and have tough conversations at times with both the relatives you work with and peers in the workplace.”
This article was originally published in the NMP Magazine April 2023 issue.
