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Investment, will help you to retire fast, with money in your packet

Most people are not familiar with private mortgages. There is nothing new, but rather a business as usual in the financial industry to turn to private individuals and or mortgage investment companies to get a mortgage when banks turned applicant down. Private mortgages fill the gaps that institutional lenders, such as the banks, are unable or unwilling to lend. They offer an alternative source of financing to borrowers and a high yield investment opportunity for investors.

Institutional lenders have their lending criteria, guidelines written and they are not able to approve some request if it does not fit the parameters of such. However private investors are able to review and make their decision on case to case bases, using their common sense and making their own decision. Due to the higher risk, these mortgages cost more by rate and fees as well so investors can usually generate a greater return on their investment in a private mortgage transaction, risk assessed rate and fee charged.

logo creatorBorrowers forced to see alternative lending sources must turn to private lenders.  Private Lender Inc. is a private lender firm, lending its own funds from his own investment capitals and also has many private investors lending their funds on the recommendation of Zoltan M. Padar president of Private Lender and also broker at MortgagePRO Ltd. Location, MortgagePRO is not licensed will be referred to many of our licensed co brokers and or private investors to ensure positive outcome.

Investors in private mortgages must be willing to take risks. They must be willing to become involved in the investment process and must know what their tolerance to risk is. They should not simply rely on the recommendation of a lawyer, a real estate agent, or a mortgage broker when entering into a transaction. They should fully understand what they are getting involved in before they agree to invest their money in any transaction.

Here are some issues the potential private lender must be clear with before investing:

  • location is where they want to lend the property located
  • property designation; residential, commercial, industrial or recreational
  • position they are willing to lend: first position, second and or beyond
  • the so called LTV. Loan to value is the indication of risk involved
  • the amount for each mortgage
  • first mortgages require large capitals, however second mortgages start at $15,000
  • interest rate investor wish to earn, higher risk, higher return
  • using own investment capital or RRSP
  • advantages of using RRSP are: tax savings on three different ways, profit is also sheltered from tax

Yields on mortgage investments determined by risk. In today’s market you can expect a yield of 10% to 13% for a moderate level (75-80% LTV) of risk. 85% LTV will bring you 16% or even better return. Minimum investments of $15,000 are required for private mortgages.

The typical borrower who needs private financing:

  • self employed individual
  • someone who may have had a bad credit history in the past
  • borrower does not fit the TDS GDS requirement of the bank

Private mortgages can also be held in a self-directed RRSP. Mortgages are an ideal RRSP investment because they earn interest income that can be sheltered within the RRSP. If you were to invest in a mortgage outside of your RRSP your interest income would be taxed at your full marginal tax rate, thus lessening the benefit of your investment. Find more about this opportunity here.

In summary, private mortgages can be a very rewarding form of investment but they are very much a hands on investment. You must be willing to take the responsibility to choose the investment that meets your needs and your tolerance to risk.

If you are interested in making an investment in private mortgages, or would like more information, please contact Zoltan M Padar 403-253-2022

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