May 25th, 2016
Syndicated Mortgage Investing

Syndicated Mortgage Investing: What to Know Before Diving In

paulm2Investments require homework. Any time you are considering investing, there is some research required to best determine which investment will net you the highest yield. Syndicated mortgages have become a very popular way for investors to invest in real property, share the risk with others and achieve strong returns.

Each syndicated mortgage is different and presents its own unique risks and rewards. There are some general things that you should know with regard to syndicated mortgage investing.  Here are five of the most important.

1. You are sharing the mortgage with others – the only thing that is different about a syndicated mortgage compared to a regular mortgage is that there is more than one lender involved in the deal. If you invest in a syndicated mortgage, there are other lenders sharing the mortgage with you. Your broker should educate you on who and to what extent others are involved in the deal.

If your mortgage broker is managing the mortgage syndication process, they may pair you with a project or investment, as well as others interested in investing – it is recommended to invest through a broker who administers the entire process, including enforcement.

2. Syndicated mortgages, like any other mortgage, carry risk – Even though there may be security, this is still a loan. This is why working with an experienced administrator with a solid underwriting process and enforcement division is critical. Risk is less with an established project with a good plan when compared against private residential syndicated mortgages.

3. The value of the project and equity is very important – The only way to effectively assess a project’s risk is to investigate it closely. For example, what is the reputation of the builder? Does the builder have a solid history or are there questions when you look back at previous projects? Looking for projects that involve more equity are always safer investments.

4. Make sure returns are well documented and stated – When you are discussing returns with your administrator, make sure that you are not discussing expected rates of return and but rather that there is a fixed rate of return on your investment.

5. Make sure you have an experienced administrator – This is critical. You should be able to rely on your mortgage broker to: source deals to invest in, vet the borrower, administer the deal, and collect should a problem arise. They are your source for support and you should be able to rely on them.

Syndicated mortgage investing represents a very viable sector of the mortgage industry, a sector which can yield real returns in a big way – just make sure that you work with someone you can trust.

For more information about investing in a syndicated mortgage, contact Paul Mangion today. Please visit