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#64 Reverse Mortgage to Help Finance a Franchise


David Garrison
Home Equity Retirement Specialist
NMLS # 1595194
Serving the State of Indiana
p (317) 644-2595 c (765) 516-0130
e [email protected]

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

December 21st, 2021

Although your original plan had been to take on consulting gigs after retirement (planned for the end of next year), the two of you have recently become interested in owning and operating a franchise business together. You’ve been exploring businesses in fields very different from those of your present employers, more in line with your hobbies rather than your experience. Nevertheless, you’re confident that your decades of successful work (in marketing and customer service, respectively) will lead to success, particularly since you plan to get involved with only a successful national brand business.

While you have been “stockpiling” cash reserves to cover the initial franchise purchase price, much of your other invested assets is in tax-deferred retirement plans. You want those portfolio(s) to remain in place, generating quarterly and monthly income until you begin to generate reliable income from the new business. A mortgage refinance is among the tactics you’re considering (the existing first mortgage is one year from being fully paid).

Acquisition financing is one of the challenges for people contemplating becoming franchisees, and it sounds as if you have that part covered. In fact, franchisors are looking for people to support themselves until their new business “clicks”. Rather than taking out a second mortgage on your home, consider tapping into the equity you’ve already built up by applying for a reverse mortgage. You’d continue to own and live in your home, but you’d have a source of tax-free funds which you could use as needed, avoiding the need to sell off portfolio assets. Once the mortgage is in place, that asset “reservoir” is sure to be a positive in the eyes of a potential franchisor.

As you “back away” from your lives as employees and begin your new lives as business owners, your reverse mortgage will cushion your foray into franchising.