Private Mortgage Investments

The term “direct mortgage investing” is used to describe an investment where the provider of the funds who is referred to as a “private investor”, either holds a mortgage in his or her name if the investor has sufficient funds to subscribe for the entire mortgage, or invests in part of a mortgage that is funded and held in trust for all the private investor who participate in funding the mortgage by The Equity Shoppe. Either way, your investment is in one particular mortgage to one particular borrower and secured by one or more properties owned that borrower.

If you are interested in pursuing direct mortgage investments, with The Equity Shoppe, the following factors make this investment vehicle very attractive:

1.Low Management Costs: The management fee charged by The Equity Shoppe to fully administer your mortgage is equal to one-half of one percent of the annual mortgage payments. As an example, if you hold a $100,000 mortgage paying 8.0% interest only, your total annual management fee would be calculated as follows: (.08 x $100,000) x .05 = $400.00. This represents 4/10 of one percent of the value of your investment which is as low as even the lowest ETF funds.

2.Cash Flow: A mortgage generates cash each and every month. Clearly the amount of the monthly payment will depend on the size of your investment and the interest rate, however the payment comes in each and every month if the borrower does not want to lose the property. For most people, the mortgage payment will be the first payment made, even in the event of financial difficulty. If individual bankruptcy occurs, a mortgage holder’s security is not affected by the borrower declaring bankruptcy.

3.Protected Capital: Perhaps the most attractive aspect of mortgage investments is the security offered by the real estate against which the mortgage is registered. The capital is protected by this security, and the value of the mortgage is decreased only by the borrower making principal payments. The risk associated with a first mortgage is less than the risk associated with a second mortgage, but then again the return from holding a second mortgage is substantially greater. The owner of the house cannot deal with the property unless and until the registered mortgage is repaid in full. If the borrower defaults, all costs incurred by the holder of the mortgage to sell the property to recoup the investment, as well as any unpaid interest, are secured against the real estate. If any amount remains outstanding after the property is sold, the debt survives and the holder of the mortgage can pursue repayment by garnishing wages and/or seizing other assets. In the alternative, the holder can choose to take title to the property by foreclosing.

To arrange an appointment to discuss how mortgage investments can help you reach your investment goals, give us a call at 905-568-1957. We would be happy to sit down with you to determine if mortgage investments are appropriate for you.