While private money investing is not anything new to those looking to place their money in exchange for a fair return, it has been gathering steam for a number of reasons.
First of all, the baby boomers are pushing into retirement age and those with investment portfolios are looking for financing vehicles that are shorter term in nature in order to provide greater liquidity. Because the vast majority of private mortgages are only for a period of one year, they tend to fit this requirement very well.
Second, the last ten years of the stock market has not provided any type of stellar performance with respect to invest returns with many investors not having less capital to work with that they did a decade ago due. Private mortgage financing not only provides a solid return on equity invested but its also backed by real estate security which greatly reduces the odds that an investor is going to take a loss.
Third, since 2007/2008 when the most recent recession hit the market, the sub prime segment of the mortgage market all but vanished as lenders took their lumps, creating a need for additional supply of mortgage capital which has been partially provided by private mortgage investors.
Fourth, also since 2007, banks and institutional lenders have tightened up their lending requirements, providing higher quality deals to be extended to private lenders. Traditionally the lenders of last resort, private lenders are now competing directly with banks and institutional lenders on certain types of deals.
Fifth, private lending provides investors with complete control of their investment portfolio. If an individual private mortgage investor wants to be the sole funder for a given mortgage, their is nothing stopping him or her from doing so. Investors can pick and choose which deals they would like to fund, set up their own lending criteria, and control the funding process through their own lawyer with the related legal costs passed on to the borrower.
These and other reasons continue to entice more investors to enter the market and place their money in real estate mortgages.
While there are no real barriers to entry or regulatory requirements to speak of with respect to private mortgage lending, the only real challenge is finding good deals to fund when you have money available to invest.
One of the best ways to locate the types of mortgage lending opportunities that fit your requirements is to work with an experienced private mortgage broker who can fully understand what you are looking for an qualify requests for financing that meet your criteria.
If you would like to know more about private mortgage investing in Canada and how we may be of service to you, I suggest that you give me a call and set up a time for a one on one discussion.