First of all, when we speak of a private mortgage investor or a private mortgage lender, in most cases they are one in the same.
The only times when you could potentially draw a separation between them is when you are referring to something like a mortgage investment corporation where the corporation looks after investor funds and places those funds into private mortgages.
In that context, the mortgage investment corporation or MIC would be the private mortgage lender and the individuals providing funds for lending would be the private investors.
In almost all other cases, the lender and investor are the same.
So regardless of how we refer to it, the question remains the same…how does one get into the business of private mortgage investing/lending?
The answer to this has a few different layers and we will now explore.
First, from a regulatory point of view, there is no securities laws or special investment governance that is required to place a private mortgage. You don’t have to take a course or become qualified in any particular manner.
Second, the level of knowledge required to start investing in private mortgages is minimal as compared to any other type of investing. This type of investment vehicle is very straight forward to understand. And while it is always a good idea to consider the counsel of experts such as lawyers, brokers, real estate agents, accountants, and so on, you certainly don’t have to when making a decision to invest or not.
Third, there is no minimum cash requirement for investing in private mortgages. You can use cash or leveraged funds if you so choose.
The only real requirements that exist to become an investor in private lending situations is to 1) have money to lend or invest; and 2) be able to access the market for potential borrowers that meet your lending/funding criteria.
Now there can be a lot more that goes into being a successful private investor as with any type of investment vehicle, there is risk involved and losses can be incurred if risk is not properly managed.
But that is really a different discussion to get into as the focus of this article is how to become a private money investor in the mortgage market.
The most common method for investing in mortgages is through recruiting the right team of experts to support you.
The majority of private lenders work with mortgage brokers to source and administer deals, and with a lawyer to close and fund the deals as well as act on behalf of the investor if there are any legal issues that arise related to mortgages placed.
Selecting the right broker and lawyer will get you well on your way to becoming an active and successful private mortgage investor.
The key is in selecting individuals that have experience and a track record of successfully managing their client’s requirements.
If you would like to learn more about our private mortgage investing services for the private investors we work with, please give me a call and we’ll set up a time for a phone call or face to face meeting that works for both of us.
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel