Investing

Wondering how you are going to save for retirement?  Feeling like the stock market is parked a little too close to the casino?

Here is a list of real estate secured investment strategies that generate income and capital gains with or without the help of a mortgage.

Private Mortgage Loans - real estate loans to help certain types of borrowers meet their short-term financing needs, usually to fill a temporary gap between the borrower's needs and what a major financial institution can lend.  These loans are brokered directly between the lender and the borrower and are secured by a specific property, usually for short periods of time - 1 or 2 years - at interest rates of 10% or higher.  Pros: Security in a specific property, clear rates and terms of the investment.  Cons:  Credit risk - borrower, Security risk - property value, Ongoing debt service administration costs.

Mortgage Investment Corporations (MICs) - Mortgage investement corporations are pooled funds of investors willing to make private mortgage loans but wishing to spread the risk across more than one loan and hire out professional management to underwrite and service the loans. MIC investments can me made for a wider range of dollar amounts and usually pay rates of return just under 10%. Pros: Shared risks and loan administration, smaller loan amounts are possible, more flexible timing, RRSP eligibility. Cons:  Credit and security risk, potentially lower rates of return.

Land Banking - Land banking is pooling resources with a site developer, usually adjacent to a growing city e.g. Edmonton, AB, who will use the funds to survey lots, install services etc, until the property can be sold off in individual building lots.  The investor is usually assigned a particular building lot and receives a lump sum pay out when the assigned lot is finally sold anywhere from 1 to 7 years from the time of the original investment. 

Commercial Syndicated Mortgages -

Besides the major psychological benefits of knowing that you are doing something to prepare for important future events, you’ll also benefit from certain tax advantages. For example, there are tax savings associated with contributing to RRSPs and RESPs. And if you borrow from any source for investments in stocks or bonds or real estate, the interest you will be paying on the loan (for example: the increased mortgage balance) is tax deductible.

Your RateMiser Mortgage Advisor can help you work through the details.

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