Many real estate investors start out with a dream of owning many properties but ultimately, many things can sway the dream or the well-thought out plans, such as low inventory, high prices, low cash flow and the inability to qualify.
So you have money but can’t get the returns you want, or you cannot find a property within your budget, so how can you make that money work for you? There are many different options available.
Syndicated Mortgage Investments, which are large-scale, blue chip real estate investment opportunities. Using this vehicle, investors lend money to Canada’s most experienced, successful real estate developers to support their urban housing, and commercial real estate development projects.
Lately Syndicated mortgages are taking a beating in the press but not all projects or developers or even syndicate companies should be painted with the same brush. They are still a great investment option! Our jobs as investors’ is to plow through the truth and what is reported in the media and do our due diligence.
Clients continue to earn a great rate of return of 8% fixed, through their RRSP’s, TFSA, and Cash.
Another great option would be MIC’s or Mortgage Investment Corporations. Just like Syndicate mortgages there are many MIC’s in the marketplace – all are not equal so you must do your due diligence but that’s where broker’s such as myself come in handy as we do this for you and vet them on returns, performance and where they invest as well as that is very important. For instance do they market in areas where the economy has been hit by the oil crisis (Calgary) or do they have a balanced portfolio?
Most of these MIC’s are private lenders and are lending to borrowers at rates between 7-12%, depending on position of 1st, 2nd or 3rd. They get funds from investors like you, where they pay around 6-10% depending on the fund and the company.
The final options is one that I personally love, which is private lending, where you become the banker.
Mortgage agents and brokers, such as myself come into situations frequently, where borrowers need second and sometimes third mortgages. As a broker, I can assist you to lend out your money. The terms are usually 1 year long and rates can range from 8-10% for a 2nd and 12-15% for a 3rd.
I personally love this method as I get the ability to put my money to work for me and earn as much if not more without the hassles of being a landlord.
There are many alternative ways to invest in real estate without being a landlord. Regardless of what option you choose, the rule of thumb, is to calculate your liquid assets and invest no more than 10-25% in either option. To use a popular phrase when it comes to investing, don’t put all of your eggs into one basket!