Most people looking to invest in real estate indirectly invest through real estate investment funds or REITs. However, some investors have found more profitability and growth through private mortgage investing. Banks and similar lenders make mortgage interest, and you can do the same as an investor.
Here is what you need to know about investing in mortgages and the benefits of mortgage investments for your portfolio.
Returns Are High
The average return on mortgage investment is between 6% and 16%. This is an opportunity to build real wealth for you and your family. It has a higher return rate than any savings account or GIC.
Begin Investing Without Tens of Thousands
You need a down payment of tens of thousands to buy a home and invest in real estate directly. With a mortgage investment, you do not need a specific annual income, credit score, or significant savings. Using a mortgage investment corporation, or MIC, you can pool your money alongside other investors and reap the same returns as larger investors.
Mortgages Are Stable As an Asset
Mortgage investment is relatively risk-free. It is a fairly stable asset that provides much-needed stability to any portfolio with above-average risk to seek maximum returns. Mortgages have lower volatility than the stock market.
Access the Benefit of Real Estate Appreciation
Real estate appreciates over time. If you do your due diligence, finding the right real estate opportunity and mortgage can guarantee a rise in value over time.
Your Fortunes Are Not Tied to a Property
You have no ownership of a given piece of real estate, meaning that if something happens and its value suddenly tumbles, it doesn’t impact you. As an investor, you are only tied to a mortgage. Changes in real estate value or developments do not affect your investment profitability.
Mortgages Offer a Considerable Safety Net
Few investment assets offer the safety net of mortgages. If a borrower cannot fund their mortgage, the property is there as collateral, and an investor can recoup their investment that way.
Diversify Your Financial Portfolio
Mortgages can be a valuable asset that can diversify your portfolio. Further, expand with an asset with minimal correlation to public markets. If stocks and bonds struggle, that doesn’t mean your mortgage investments will do the same.
Enjoy Steady Income Every Month
When mortgage payments are made, you receive the equivalent of a dividend simply because you’re the lender. After you invest in a mortgage, you do not need to do anything. Enjoy steady and passive income with no work, deposited into your account every month.
No Upkeep or Maintenance Responsibility
With a mortgage, you get all the benefits of real estate investing with no risks. There is no need to find tenants to rent to, no property management or building upkeep to worry about, and no overhead. It is a simple investment you can trust.
Term Lengths Are Favorable and Not Long
Mortgage investments are disadvantageous because they are more liquid. However, the average term length for this type of investment is 12 months. This is not an extended period, and an investor has to wait to withdraw.
MICs Have Lots of Experience
You aren’t going it alone investing in private mortgages. Through an MIC, all you have to do is invest your money. They do most of the work evaluating lenders and securing mortgages on which you can earn returns.
Invest in a Private Mortgage Lender Right For You
Examine lenders’ reputations, track records, investment strategies, risk management, due diligence practices, and terms and restrictions. Not all private mortgage lenders are created equal. Some may offer advantages over others that are worth considering when jumping into mortgage investing.
Mortgages Are Carefully Selected
When you invest in mortgages, you invest in carefully selected high-quality and low-risk mortgages.
Choose Your Investment Approach
As you discover what investing in a mortgage is, you can employ different strategies for your investment goals. If you want to withdraw your funds after a year and invest them elsewhere in your portfolio, you can. This is one type of asset that can add value to a portfolio.
No Trading Fees
You aren’t trading stocks, bonds, EFTs, and other assets, so you aren’t paying trading fees. A partner may charge you a very low annual fee, but beyond that, mortgage costs are extremely low, saving you more money.
