Given the fact that the stock market can be so volatile, while low interest rates are making government backed securities almost not even worth your investment dollar, the fact that there are so many real estate investors wanted is good news for people who are looking for portfolio security through diversification. The mortgage market provides higher returns that securities such as government debt and bank issued certificates of deposit while bringing less risk to investors than stocks and many mutual funds. Amansad Financial has relationships with many clients who need mortgage funding from sources other than traditional lenders and also has leads to investments in the mortgage market that are more secure than individual private lending.
Investors wanted for real estate
The reason why there are so many real estate investors wanted is that there are many solid mortgage clients out there who are not being served by the traditional lending institutions. It is true that banks are beginning to (ever so slightly) ease their regulations regarding new mortgages, but the requirement of a 20 percent down payment, detailed income verification and high credit scores are keeping too many borrowers out of the game. There are people looking for mortgages who have saved up as high as 30 or 40 percent for a down payment. However, the fact that they had some financial struggles in the past few years before saving up that down payment has kept their credit score lower than what the banks want to see. Also, some of these potential borrowers have done really well with businesses that they own. However, people who are self employed face more daunting income reporting requirements, and people who have an income stream that is plentiful but somewhat irregular often have a difficult time convincing the banks that they can make those payments regularly and on time.
This means that the number of real estate investors wanted have a number of options, should they choose to wade into the market. One of these is becoming an owner of real estate and then either turning into a landlord or a lender for the property before you flip it. Especially in western Canada, there are still a number of residential and commercial properties that are well under their value as far as their listing price. All it would take to develop some of these properties is some financing to make improvements and then a quick turnaround on the property to make a nifty profit. Basically, you would buy the property, either with a mortgage of your own or through an outright cash purchase. Then, you start bringing in tenants while you’re making improvements on the property. When you have finished, you should have some new tenants (in the case of commercial or multifamily properties, or perhaps even some single family dwellings) bringing in an income stream and a property that has a number of improvements. When you put it back on the market, you should be able to bringi n a price that is significantly higher than what you paid for it, as well as the cost of any improvements.
Private Investors Needed
Private Investors Wanted – As a private lender, you have two other options: the arm’s length mortgage and the non arm’s length mortgage. One way that you can use your RRSP funds in Canada is to provide a mortgage for a purchaser. An arm’s length mortgage involves you using your RRSP money to purchase a property for someone you do not know. This can work for commercial, residential, or industrial purchases as well as recreational property or even open land. This can be the first, second or third mortgage on a property. The same process works in a non arm’s length mortgage; the only difference is that a non arm’s length mortgage goes to someone you know, such as a family member or friend. Either way, your money is registered on the property record to give you security in case of default.
One risk of the arm’s length mortgage is default. If the borrower fails to make payments, it’s up to you to go through foreclosure, and you’re missing out on those payments each month. Another area in which there are real estate investors wanted is in mortgage investment corporations. You put money into these companies, and they fund large numbers of mortgages. You get a monthly check for your return, but your money is actually funding small parts of hundreds, or even thousands of mortgages, depending on the size of the corporation. In the end, your reward is still higher than government secured investments, but the risk is a lot less than if you fund an individual mortgage.
Amansad Financial stands ready to connect you with people who need mortgage financing. Take advantage of the fact that there are so many real estate investors wanted and start the process today!