Hi Guys,

Anyone has an experience in investing as second mortgage?

Recently, I come across with http://paramountequity.ca/ and I talked to one of their advisor.

It offers 12% return on investment. Investment goes as second mortgage for short term (12 months) on residential property (Individual home owner not the builder). Investors name will be on title of the property. Investment can be part of RRSP, RESP or TFSA too.

Monthly interest and money back at the end of 12 months term if you do not want to reinvest in other property.

I am just wondering how safe is this investment. Initially I was thinking what kind of home owner paying more than 12% interest and accepting second mortgage.

Then I learn there are home owners who pay more interest on credit cards and there is the market for this kind of short term investment too.

I am wondering about anyone has an experience or knowledge about this kind of investment.

What are reasons for home owner to borrow money at more than 12% as second mortgage?

What are advantages and disadvantages to invest in this kind of business?

Does anyone knows much about Paramount (link above)? Any +ve or -ve reviews?

Any other less risky option to make high interest on investment? (No stocks please. It is not for me.)

Thanks

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Success is Never Ending and Failure is Never Final.

Here is an article on this subject. It gets very interesting as you start reading it. So, I Wll post it under this.:

Double-digit returns and a good income stream is what mortgage investment corporations offer. Will you get double-digit returns?

Finally, don?t be surprised if MIC returns have?or continue?to drop. At present, most stable MICs are providing a net 5% to 10% return to their investors, depending on the risk level. ?There?s more capital competing for the good, quality debts and that pushes rates down,? which impacts returns, explains Knop. This may change as more individuals and businesses find it difficult to qualify for mortgages, but for now, even MIC returns are feeling the pinch. That is if you consider a 5% to 10% annual return on a fixed income investment pinched.

Where to find a MIC

Finally, if you?re really interested in MICs you?ll need to do a bit of your own research. For those interested in private placement MICs?corporations that sell shares through Offering Memorandum, you?ll need to do a search. There are hundreds of MICs in Canada?some large and some small. For accredited investors, there is ample choice and MICs can be found operating in almost every province, but you?ll need to really examine the investor materials provided. Remember you?re looking for consistency, longevity and a lower risk profile for sustained returns.

For non-accredited investors, or investors with a lower minimum sum to invest, consider publicly-traded MICs. Up until 2011 you really had only three options to choose from. However in the last year, the number of publicly-traded MICs on the TSX has risen to about a dozen. The advantages of these market-traded MICs are as follows:


FH.
http://www.moneysense.ca/columns/mics-make-money-on-debt/

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Originally posted by meitsme

Hi Guys,

Anyone has an experience in investing as second mortgage?

Recently, I come across with http://paramountequity.ca/ and I talked to one of their advisor.

It offers 12% return on investment. Investment goes as second mortgage for short term (12 months) on residential property (Individual home owner not the builder). Investors name will be on title of the property. Investment can be part of RRSP, RESP or TFSA too.

Monthly interest and money back at the end of 12 months term if you do not want to reinvest in other property.

I am just wondering how safe is this investment. Initially I was thinking what kind of home owner paying more than 12% interest and accepting second mortgage.

Then I learn there are home owners who pay more interest on credit cards and there is the market for this kind of short term investment too.

I am wondering about anyone has an experience or knowledge about this kind of investment.

What are reasons for home owner to borrow money at more than 12% as second mortgage?

What are advantages and disadvantages to invest in this kind of business?

Does anyone knows much about Paramount (link above)? Any +ve or -ve reviews?

Any other less risky option to make high interest on investment? (No stocks please. It is not for me.)

Thanks

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Very interesting. Thanks for link.

Anyone has personal experience with any MIC (Mortgage Investment Corporations)?
Any suggestions / comments?

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Success is Never Ending and Failure is Never Final.

When the house goes on Power of Sale- bank ( read as first mortgage lender ) gets the first opportunity to recover the debt . If any money is left than it goes to second mortgage lender making it very high risk business.
Second mortgage on the house is generally beyond recovery unless property has appreciated in multiple folds.

Anyways bigger the risk is better is the reward.

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Growing Old Is Mandatory ..Growing UP is Optional

I have one known person who invested on third mortgage at high interest. The house went on power of sale. The second mortgage person paid off to the first mortgage (bank) and took the control. He was able to get his money out but left the third mortgage person dry.

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A Delhite in Toronto