Beating inflation. Beating the market. Earning more than the average – Sounds like every Canadian’s dream. But do you know, it is possible? Private Mortgage investing is a popular alternate investment avenue. You can invest in the mortgage sector and earn returns between 10% and 14%.
As an average Canadian, you can individually invest in the mortgage sector. You are neither required to obtain any license nor do you need to be a business or corporation.
In Canada, there are several Mortgage Investment Corporations (MIC). These corporates are specifically incorporated to attract and pool funds from individual mortgage investors. Some popular MICs in Canada are – Atrium Mortgage Investment Corporation, MCAN Mortgage Corp, and Timbercreek Financial, etc.
The MICs invest the proceeds in the mortgage sector, which includes:
The portfolio of a MIC is diverse and includes all types of mortgages on both commercial and residential properties. These organizations collect money from private investors and invest in the mortgage sector. In return, the investors get dividends based on the yields generated by the MIC.
For example, Atrium MIC collected funds from the public and invested in its new low-rise residential project. Whatever the company earns, is passed on to the investors as dividends after deducting operating and administrative expenses.
To do private mortgage investing:
It must be noted that a MIC is a flow-through investment vehicle. It is obliged to distribute 100% of its net income to the shareholders.
Particulars | Atrium | MCAN | Timbercreek |
Ticker Symbol | TSX: AI | TSX: MKP | TSX: TF |
Focus | Residential and Commercial Mortgages | · Uninsured residential mortgages
· Residential construction loans |
Commercial mortgages |
Average LTV Ratio | 61.40% | 61.50% | 68.20% |
Residential Mortgages (% of Portfolio) | 80% | 96% | 50.10% |
Commercial Mortgages | 20% | 4% | 49.90% |
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