Posted on: 20-01-16 12:25:15
Hi CDs
These days I am regularly hearing on the radio an ad for 'secured RRSP/ TFSA investment with 14% returns' ..... There has to be a catch some where ... wondering if any CD has found it till now ..... My guess would be that the assets guaranteed against would risk meltdown in 2016-2017.
Found the last line intriguing ' For accredited investors only'
Thought sharing ??
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Fido.
Quote:
Originally posted by Fido
Hi CDs
These days I am regularly hearing on the radio an ad for 'secured RRSP/ TFSA investment with 14% returns' ..... There has to be a catch some where ... wondering if any CD has found it till now ..... My guess would be that the assets guaranteed against would risk meltdown in 2016-2017.
Found the last line intriguing ' For accredited investors only'
Thought sharing ??
I heard same AD in Radio too.....my assumption is most of these kind of Investors they are landing out second mortgage with high interest rate of around 17 to 18%..so they make some portion of money from your investments....again money is invested it is in high risk ratio area.
may be I am wrong here????
It is a 'syndicate mortgage' vehicle for new housing developers. The banks and other big financiers used to provide up to 85% finance to the housing developers. A few years back, they reduced it to 75% so the developers need to arrange this gap of 10% either from their own resources or have to go for these syndicate mortgages where a large number of small investors create a pool to finance the developers. All small investors get their name on land documents with a very small percentage (say 0.00001% of the total subdivision land). The syndicate mortgage company keeps around 2 to 4% for themselves and pass on the balance from 8 to 12% to the real investors. Most of them have a minimum period of 4 to 6 years, depending upon the development stage. It is a secondary mortgage so in case of any eventuality, the primary lander (big bank or finance company) will get the money first and the remaining will go to secondary lander (syndicate lander). This is the only catch. As long as the housing market is in good health and the project is good, I think it is a risk worth taking. The low rise projects are safer but paying lesser return as compare to high rise projects.
Project location and builder are most important factors. There was a good builder brought a semi-detached housing project of 6 years (8% return) in east Brampton - Castlemore and it was fully financed within a week. Like other investments, it also has its own perils.
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A Delhite in Toronto
There is another scheme going on radio and it is related with rental property - I think in high rise. If you book a new condo/unit, the developer will guarantee a return of 15% on your down payment as rent.
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A Delhite in Toronto
Quote:
Originally posted by Delhite
There is another scheme going on radio and it is related with rental property - I think in high rise. If you book a new condo/unit, the developer will guarantee a return of 15% on your down payment as rent.
I havent heard the ad - but if you understand the scheme - can you explain if it is 15% on the down payment or on the condo value?
Most condos are booked with 5% down and 20% over the period of construction. so it is 15% of 5% or 15% of 20% or 15% of condo purchase value?
Thank you for bringing this info to CD.
Hiren
15% return on your down payment after deducting the mortgage + other exp.
For example the cost of condo 200K
Downpayment 10% = 20K
Mortgage payment on 180K = around 9K
Maintenance + other exp for example = 6K
Total exp 9+6 = 15K
Rental income = 18K @ 1500 pm
Net income (rental income - total exp) 18-15=3K so your return on initial investment of 20K is 15%.
All above numbers are just for example.
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A Delhite in Toronto
Thanks for explaining.
The numbers will be different for higher DP and maintenance costs. 
Anyways, get the drift of calculation here.
Thanks again.
Hiren
