If you’ve decided that mortgage investment pools are for you and you’re ready to diversify your investment portfolio with the help of a MIC, congratulations! However, your due diligence begins now.
To find a trustworthy and reputable MIC, you must first understand the qualities to look for in a top-tier MIC and then know what to look for when researching.
This blog is your guide to identifying reputable MIC lenders in Canada. By the end of this blog, you’ll be confident in your ability to choose a trustworthy lender, allowing you to focus on maximizing the potential of your MIC investment.
Key Factors When Choosing a MIC
While a high Return on Investment (ROI) is undoubtedly attractive, it shouldn’t be the sole factor when choosing a MIC lender in Canada. There’s more to consider to ensure a secure and successful investment experience. Here, we delve into critical aspects beyond ROI that every investor should evaluate when selecting a MIC lender.
1- Understand the Real Estate Market
When researching MICs, starting with the real estate market is essential. Successful mortgage pool investing is directly related to market conditions. Consider whether this is an appropriate time to consider this alternative investment strategy. Check out local and national publications to see how the housing market is doing. Remember to look at the local and national housing markets for a complete picture.
Take the time to learn what the experts are saying. Many real estate and mortgage publications can help you better understand the markets you intend to invest in. Look for relevant information in publications such as Mortgage Broker News and Canadian Mortgage Trends.
2- Consistent Earnings
A reputable MIC lender will be transparent about their performance. Ask for historical data detailing the MIC’s target Return on Investment (ROI) compared to their results for the past 5-10 years. This track record reveals two important things:
- Accuracy of Projections: Can the lender accurately predict future performance? A history of consistently hitting or exceeding ROI targets is a positive sign.
- Consistency of Returns: Does the MIC deliver consistent returns year after year? Look for stability in ROI over time, indicating a well-managed MIC.
By requesting this information, you gain valuable insights into the MIC’s past performance, helping you assess their ability to deliver on their promises.
3- Avoid getting locked in!
Liquidity is crucial when it comes to MIC investments. Always review the MIC lender’s liquidity agreement before investing. This document outlines the terms for withdrawing your funds.
Imagine needing your money but discovering it’s tied up for an extended period. Some MICs restrict withdrawals to once a year, causing major headaches.
You ensure your investment aligns with your financial needs by requesting and reviewing the liquidity agreement upfront. A reputable MIC lender will be transparent about these terms, allowing you to make informed decisions based on your access to your funds.
4- Don’t be left in the dark!
Effective communication is a hallmark of a trustworthy MIC lender in Canada. Here’s what to look for:
- Regular, Clear Reports: A reputable MIC lender will provide clear and consistent reports to inform you about your investment’s performance. These reports should be easy to understand and delivered at regular intervals.
- Proactive Communication: The best MICs go beyond basic reporting. They anticipate investor questions and proactively address potential concerns.
- Dedicated Investor Relations: Look for a MIC with a designated investor relations manager. This point of contact should be readily available to answer your questions, provide additional information, and help you understand the intricacies of their MIC product.
5- It’s not a one-size-fits-all game!
Choosing the right MIC lender requires aligning their risk profile with your risk tolerance. Here’s why:
- MIC Portfolio Composition: Investigate the specific makeup of the MIC’s portfolio. This includes the types of properties (urban vs. rural) and the mortgages they hold (first vs. second liens). These factors influence interest rates, potential returns, and the inherent risks of the investment.
- Matching Risk Tolerance: A conservative investor might prefer a MIC focused on lower-risk, first mortgages on suburban properties. Conversely, an investor with more risk might seek a MIC specializing in urban, high-value properties with second mortgages.
6- Understanding Dividend Distribution
When evaluating MIC lenders, consider how and when they distribute dividends, especially if you plan to reinvest them. Dividend reinvestment allows you to benefit from compounding, where your earnings generate additional earnings over time.
Understanding the MIC’s dividend distribution schedule can help you align your investment strategy. A quarterly or monthly dividend option might be ideal if you prefer frequent reinvestment.
You can also plan for cash flow. If you rely on dividends for income, consider a MIC with a schedule that aligns with your needs.
Final Thoughts: Invest in MICs with Confidence
While MICs offer attractive ROI potential, take your time. This guide equips you to make informed decisions.
Understand the Market: Research local and national housing trends to assess the climate.
- Look Beyond ROI: Evaluate a MIC’s historical performance, focusing on consistency in hitting ROI targets and delivering stable returns.
- Prioritize Liquidity: Review the MIC’s liquidity agreement to ensure access to your funds aligns with your needs.
- Demand Clear Communication: Choose a MIC that provides regular reports, anticipates your questions, and offers a dedicated investor relations contact.
- Match Risk Tolerance: Investigate the MIC’s portfolio composition (property types and mortgages held) to ensure it aligns with your risk comfort level.
- Consider Dividend Distribution: Choose a MIC with a dividend payout schedule that complements your reinvestment or cash flow needs.
By following these steps, you’ll be well-positioned to identify a reputable MIC lender in Canada, allowing you to invest in your financial future confidently.
Disclaimer:
This website is provided for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. No securities regulatory authority has assessed the merits of these securities or the information contained in this website. Potential Investors should conduct their own due diligence before investing. All statements in this website, other than statements of historical fact, that address events or developments that Canguard expects to occur are forward looking statement. These forward-looking statements generally can be identified by the use of words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “believe” or “continue”, or the negative thereof, or similar variations. Please see the Offering Memorandum for a complete description of the risks associated with investing in Canguard Mortgage Investment Corporation. Purchase of Canguard Shares may be made through Kite Financial Solutions Ltd or a Dealer/Advisor.