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Case Study: Household Hurdle Rate

//Case Study: Household Hurdle Rate

I hope your 2021 is off to a great start and you are staying healthy in this COVID World. This year in the residential mortgage world is off to a very strong beginning and mortgage interest rates are historically low. Great news for us homeowners and it gives us the ability to lower our cost of borrowing which is what I want to discuss with this letter and case study.

I am focusing this first quarter of 2021 on the theme of On-Boarding, bringing new clients into your practice and the concept of quantifying their cost of borrowing, what I like to call the Household Hurdle Rate.

In business school, “Hurdle Rate” was a key financial metric for us to determine since it guided us as to what we should do with free cash flow each month – invest it in the business or pay down debt. What I do with my clients is exactly that, identify this rate which invariably leads to a focus on investing due to the low cost of borrowing.

I believe a very smart step to take with a new client, especially younger investors getting started, is to bring to light their Household Hurdle Rate so they can clearly see what would be the best and highest use of their investable dollars.

Check out this case study that outlines this and shows the power of lowering the cost of debt and investing that free cash flow. This case study that I have included shows a real case (name changed of course) where a client refinanced their home, paid off a LOT of debt, and then channeled the free cash flow to his investments. The Result – over $168k in wealth creation! Please give me a call (858-688-6813) or send me an email ( to discuss implementing this into your practice. It is EASY and POWERFUL!

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