Perhaps you are looking for ways to diversify your investments to yield more returns. You may have heard about syndicated mortgages but may be unsure about what is involved and quite frankly whether or not a syndicated mortgage is a safe investment. We’re here to help.
Simply put, a syndicated mortgage is a mortgage that is financed by multiple individuals or companies. Syndicated mortgages are attractive to many investors because some yield high returns and they are RRSP eligible. They are also secured on real property. In a syndicated mortgage, there is a contract that includes a term and you receive your money and returns based on it.
Syndicated mortgages have been around forever but have gained popularity and press in recent years as they are an opportunity that enables investors to invest in real property while diversifying their risk, sharing it with others.
O, to answer the question of whether or not a syndicated mortgage is a safe investment, a syndicated mortgage is as safe as the deal and/or project you get involved in.
What does this mean? Well, if you were to finance an individual for their home, would you advance 100% of the value? Not likely – a deal that involves more equity is a safer deal, as one example. The key to getting involved in a safe deal is to finance the right loan to value according to the project/borrower profile.
If you are new to investing in syndicated mortgages, the best thing that you can do is work with an experienced mortgage broker who specializes in syndicated mortgages. A syndicated mortgage could be on a residential property or it could involve construction or a commercial project which can make a deal that much more complex.
The arrangement of the syndicated mortgage you are involved in is critical – from underwriting to administration, you will want to have the support of someone experienced in this arena.
A good broker can actually marry you to good projects and also other investors to share your risk. Your broker should be able to provide you with a plan or prospectus for the project and help you work through all the details so that you understand clearly all that is involved.
Don’t rush it. Before jumping into syndicated mortgages, research them and the professionals who specialize in this area. Form new relationships and ask lots of questions.
Interested in investing in syndicated mortgages? You can get started with as little as $20,000.
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