This dilemma exists because there are so may slices to the private mortgage market.
For instance, at the highest level of market segmentation, your strategy for investing can involve residential versus commercial and industrial property. Then there is lone size to consider, application of funds such as for debt consolidation, construction, and development, then there is geography, exit strategy, loan to value and mortgage position…
The list of potential areas to focus on is almost endless, which can make it difficult for some investors to get started.
When I get calls from investors that want to discuss potential private lending through our brokerage, the strategy to consider many times becomes the focus of the conversation.
Unless the investor has some predetermined investment criteria that would dictate what type of financing strategy should be considered, I tend to suggest the following approach.
By focusing your attention on what you know, have experience with, and are comfortable assessing, you can form a basic investment strategy for getting started with private mortgage lending.
Too often potential lenders and investors make the whole process too complicated and talk themselves out of putting money out in the market.
But getting started can be as simple as just focusing on what you know.
I had an investor call me wanting to invest in private mortgage, who had made quite a bit of money successfully completing land development projects.
The obvious starting point was getting him involved in some development financing deals.
Sometimes when investors start with what they know they never even consider other parts of the market which can work just fine.
The key here is that there a multitude of potential mortgage investment strategies out there and utilizing any of them is related to your personal comfort with the knowledge required to make a good investment decision.
In the fairly rare situation where someone with money to invest does not have a professional knowledge or expertise to draw from when assessing private mortgage opportunities, we suggest that they start small with residential property mortgages.
All investors have experience owning a home and/or rental property. And being that residential is the largest segment of the market, its still possible to draw from what you know and focus in on the most straight forward and lowest risk residential mortgage opportunities available.
If you want to discuss private mortgage lending strategies, give me a call and we’ll go over what is the most relevant to your investing criteria and knowledge base.
Click Here To Speak Directly To Toronto Private Mortgage Broker Joe Walsh