For more details on each of these specific strategies and

how Claire can help, click here.

Advantages

There are many advantages, including security. You have the real estate as security in a default situation as you are registering a mortgage charge on title when you provide the funds via a real estate lawyer. The property can’t be sold without you being paid first!

You have the opportunity to diversify your investment portfolio – not having all your “eggs in one basket”. If being a landlord doesn’t appeal to you, then this gets you into the real estate investment market relatively safely. You get to decide the terms – 1 year, 2 years etc., depending on when you want your money back! You’ll receive a fixed interest rate resulting in a clear return on your money that is sometimes higher than your existing returns on mutual funds, stocks etc.

 Here are some examples:

You can use your RRSP and shelter the profits from tax until withdrawal Self Directed RRSP). Not only do you get to decide on the interest rate, but you will often charge an up-front fee as well … you are the lender so that is your “fee for service” and an immediate return on your capital. Often all legal fees for the lender (you) are paid for by the borrower… so no extra cost to you. Even if the borrower’s default, you have the opportunity to take over the property and any other existing mortgage payments to avoid a loss. You may even end up owning a property that adds positively to your portfolio.

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Disadvantages

If there is an increase in interest rates over and above what you are charging you could see you lose some extra potential profit. If you suddenly need your cashback that you loaned out, you can’t because it is tied up in the real estate and you are legally bound by the terms of the mortgage.

Also, the worse-case scenario is default occurs followed by foreclosure that results in a loss of your principle and interest. 

Many of these disadvantages can be overcome by hiring the right

real estate lawyer and mortgage broker to your Power Team.

Remember, just like any investment, these are examples only and not guaranteed. When you invest in real estate as a private lender, your security is a registered charge known as a lien on title of the property.

This does mean that the borrower cannot sell the property without you being paid out. But even if they are forced into power of sale, judicial sale or foreclosure, there is no guarantee you will recoup all your principle back.  

“The benefit of working with me as your mortgage broker is that we focus on the exit strategy and working with the borrowers during the term of their mortgage with you.” – Claire Drage, Mortgage Broker

This ensures that if there are any blips along with the way or things aren’t going as well as planned, we are being proactive to find a solution as quickly as possible.

Ready to begin investing in real estate?

Claire and The Windrose Group team can help!