Striking a Balance at 15,000 Feet
Michael Schumacher and Aaron Roth follow a big picture formula to keep their portfolios in an upright position.
Like many small company leaders, Michael Schumacher and Aaron Roth, the president and vice president of Enact Partners, respectively, fill more positions than their titles would suggest.
“We wear a lot of hats,” Roth said.
“Right,” Schumacher agreed. “I’m the president, but I’m also the janitor.”
The closeknit team at the Enact office hasn’t had many messes to clean up. Zero, in fact.
“One of the things we’re most proud of is that we’ve never lost any investor capital,” Roth said.
Maybe it’s because they’re so personal that they’ve found the most effective way to operate their firm.
“Quite literally, I think all of our direct investors have our mobile numbers,” said Schumacher. “And regarding the future of Enact Partners—we don’t want to lose that.”
Enact Partners is a hard-money lending company based in Carlsbad, California. It made its mark in the southwest corner of the U.S. by lending five- and six-figure amounts. Over the last half-decade, it has settled into a position to supply investors with seven-figure loans.
“We’re unique within our space in the industry,” said Schumacher, “because we’re comfortable doing larger loans. Our average loan size is now slightly under $3 million.”
“We continue to grow our company and perfect our systems and processes,” said Roth. “I think we’re making an impact in our industry by doing things the right way, being transparent and honest. Our objective is to help our borrowers, help investors earn a consistent yield and, in turn, help communities by creating jobs through construction financing and aiding developers in their projects. These are the things that have a lasting impact in our community.”
You’d be hard pressed to find two people who are more concerned with enriching their communities. When they aren’t working or spending time with their families, the pair’s hobbies are almost entirely community-centric.
“I’m a firm believer in taking care of your own backyard,” said Roth. “When I’m not working or being a dad, my time goes toward youth sports and coaching. I believe coaching has a major impact on a lot of kids, and it’s a pleasure watching them grow. I’ve inherited a lot of sons, if you will.”
Depending on the day, Schumacher’s backyard may be the dirt bike track or hanging 10 somewhere along California’s golden coast.
Like Roth, Schumacher never misses a moment to spend quality time with his family. “My son and I have been surfing together for quite a few years now, mostly in the summer when the water is warmer. We’ve also been dirt biking since my son was five,” he said.
Schumacher gives back to the community by lending his services in a public capacity. “I recently served five years as a Carlsbad city council member,” he said. “I really enjoy being involved and helping lead the community. Prior to that, I was on the Carlsbad Planning Commission, and I currently serve on the San Diego County Regional Airport Authority.”
Schumacher and Roth have personalities that in combination propel them toward success. Each one is a wing on the plane, traveling harmoniously to their destination. Their strengths complement each other as well, in and out of the office. Their brains are so in sync that it’s not uncommon for one of them to begin a thought only to have the other finish it.
They partnered up thanks to a networking event, where they met nearly 10 years ago.
“We started as friends,” Roth said. “We met at a networking group here in San Diego, and I always liked Michael and thought he was funny. We hit it off, and I think we have a lot of commonalities and see eye to eye on a lot of things. Naturally, we became friends.”
“Aaron was heavily involved in the fix and flip industry,” Schumacher said. “In all aspects of residential real estate, really—sales, appraisals, evaluations—he’s got a strong background in the residential space. My background doesn’t include the residential space per se. Mine is more on the commercial side—real estate development, constructing office and retail buildings, historic rehab, land planning, things like that. Between us, we cover quite a bit of space in terms of what we feel comfortable taking on.”
“When Michael told me what he was doing and that he was founding the company, I was intrigued,” Roth said.
“I didn’t want to deal with the volatility of the stock market,” Schumacher said. “So, I did a first trust deed with my friend. We did one loan and that went well, so we did another one, and my friend said, ‘I know a friend who’d love to participate if there’s room.’ So he joined and we did another one, then I had friends who were interested, and before you know it we’re at nearly $40 million in assets. And that’s really how Aaron and I have grown the business. We invest in the deals ourselves, and that gives our investors the comfort that we’re in it too.”
Things have worked out well for the pair, due in part to their consensus on how business—and life—should be conducted.
“Doing the right thing when no one’s watching is such a big deal to me,” Roth said. “My kids probably hear it more than they want to, but I truly believe it’s one of the most important ways to live life and do business.”
”That’s an ethic we live by,” Schumacher said. “And our business has also been shaped by the feedback we’ve received by our investors. Whether it’s positive feedback or constructive criticism.”
The two have strong natural instincts for finding stability between work and play. By seeking creative ways to maintain a healthy work-life balance, becoming burnt out is far less likely a possibility.
For example, Enact’s offices aren’t across the street from a flight club by chance. The two take every chance they get to hop over and fly to properties, meet potential investors—or to simply clear their heads.
“Being up flying—you’re definitely not thinking about anything else,” Schumacher said. “It’s a great distraction and a lot of fun. Recently my wife has started to join me up in the air. It’s been useful for making deals as well. We make a lot of deals around the state, from northern California out to Las Vegas, so Aaron and I will just hop in the plane and fly.”
Schumacher believes everyone should go skydiving at least once in their lives, so that taking a leap of faith isn’t a new concept to them. Perhaps that’s why the pair are so excited to face the unknown in their upcoming company shift.
“We’ve been doing private money loans since 2013,” he said. “The way we’ve been operating is that each individual loan is essentially its individual LLC, which gets cumbersome from a paperwork perspective. In 2017, Aaron and I made the strategic decision to streamline the process and put it all under one LLC. So, rather than our investors receiving 10 different deposits every month and getting 10 different tax documents at the end of every year, it’s a lot more simple.”
“It’s being launched now, and we’re calling it EP Guardian Fund,” Roth said. “Enact Partners is the managing member of that fund.”
This modification will also better position investors to monitor the performance of their portfolios.
A Smooth Landing
The two agree that what keeps them motivated to work so hard is their families.
“Building a legacy for my family is what I really hope to achieve,” Roth said. “A hug from them is always the best part of my day. They’re my biggest motivator. I couldn’t live without them.”
“Aaron pretty much nailed it,” Schumacher said. “When I’m told that I’m a good father, that’s about as good as it gets.” ∞
(You can reach Michael Schumacher and Aaron Roth by visiting EnactPartners.com.)