Mortgage Investment Funds in Toronto
When most people buy residential or commercial property, they need to secure a loan. There are two ways they can get a mortgage: from a traditional lender, like one of the big banks or trust companies, or from private sources.
Because traditional lenders have implemented stricter lending rules and new stress tests—forced by the government—homebuyers who would have once had no trouble getting a mortgage, are being rejected. This has resulted in more and more higher quality Canadians turning to private lenders to find a mortgage.
What many Canadian investors do not realize is that they can invest in mortgage investment funds operating as Mortgage Investment Corporations or MICs.
Mortgage Investment Funds from Mortgage Company of Canada
MICs invest in real estate-backed mortgages, pooling shareholder capital and lending it as mortgages for residential and commercial real estate. When someone gets a mortgage from a MIC, they sign a contract that legally requires them to repay the mortgage investment with strict terms, interest rates, and conditions.
The MIC then makes its money off interest rates that are higher than what banks charge, and fees.
Because of the way they are structured, MICs are legally obliged to return 100% of their profits to shareholders. Investors, who have seen their portfolio decimated by artificially low interest rates are attracted to MICs because of the excellent annual yields and tax breaks.
Why You Should Invest in Mortgage Company of Canada
There are a number of excellent reasons why investors should consider Mortgage Company of Canada’s MIC.
- Professional Management: Mortgage Company of Canada’s management team has been in the mortgage lending, brokering, and real estate development business collectively for over 40 years.
- Niche Market Focus: MCOCI primarily lends to residential communities in the Greater Toronto Area.
- Conservative Valuations: Mortgage Company of Canada lends at a discount to appraised values determined by independent third-party appraisal companies.
- Disciplined Approach: Protects real estate portfolio against corrections in the market by limiting Loan-to-Value (“LTV”) ratio to an average of 80% or less.
- Limits Risk Through Diversification: Creates portfolio diversification by providing a high volume of small value loans.
- Liquidity: Investing in short-duration loans (average loan duration is 12 months).
- Above Average Returns: Because of these reasons, Mortgage Company of Canada has been able to provide stable, above average annual returns above 9.25%, which it distributes in the form of monthly dividends.
All mortgage investments must be fully secured by real estate, with properties appraised by an accredited approved third party. On top of that, Mortgage Company of Canada’s experienced in-house team screens potential borrowers before presenting their mortgage investment to lenders.
On top of that, a minimum of 50% of assets must be invested in residential mortgages and/or cash. The MIC must have at least 20 shareholders at all times and no single shareholder can own more than 25% of the capital stock of the MIC.
Finally, the financial statements of a MIC like Mortgage Company of Canada must be audited annually. Thereby ensuring transparency and trust.
How to Invest in Mortgage Company of Canada
Mortgage Company of Canada is steadfast in its approach to finding qualified investors. In order to become an investors in Mortgage Company of Canada, individual investors need to qualify as an “Accredited Investor” as defined in National Instrument 45-106.
To qualify as an accredited investor, you must meet at least one of the following conditions:
- Your net income before taxes was more than $200,000 in each of the two most recent calendar years, and you expect it to be more than $200,000 in the current calendar year.
- Your net income before taxes, combined with your spouse’s, was more than $300,000 in each of the two most recent calendar years, and you expect your combined net income before taxes to be more than $300,000 in the current calendar year.
- Either alone or with your spouse, you own more than $1 million in cash and securities, after subtracting any debt related to the cash and securities.
- Either alone or with your spouse, you have net assets worth more than $5 million.
Accredited investors can purchase Common Shares in the Mortgage Company of Canada with a minimum investment of $25,000. If you are looking for ways to generate additional income or grow your investment portfolio through real estate backed mortgages, Mortgage Company of Canada may be the perfect investment vehicle.