Passive mortgage investing involves lending money to borrowers who are typically real estate investors and business owners to acquire or refinance investment properties. Essentially, private, individual investors supply capital which is lent to borrowers and is fully secured by the underlying real estate.
Here’s an example: A real estate investor wants to purchase a property and needs financing. A traditional conventional loan may not be possible due to the property being in poor condition. The investor also wants funds to renovate the property, which is very common.
Their best option is likely a privately funded loan. Our company will then underwrite the borrower, the property, and the viability of their project. If we approve it, then we provide them with the loan.
The rates are higher than what they would typically obtain through a conventional loan, but because this is a business transaction and there will be profit made, this is built into their cost of doing business.
A Win-Win Situation
The real estate investor renovates the property, will likely sell it to a homebuyer, adding inventory to the limited availability of homes. Our capital investors get above-market, risk-adjusted returns on their capital. The real estate investor makes a profit on their project, and a family is now a homeowner. This is a win-win-win.
The beauty of passive mortgage investing lies in its hands-off nature as opposed to active real estate investing while still involving the stability of a physical asset. As with any investment, there are risks involved. Because of this, we have implemented numerous safeguards and risk prevention measures to protect and preserve our investors’ capital.
Passive mortgage investing can be an excellent way to diversify your portfolio and potentially generate consistent returns over time. Contact us to find out if passive mortgage investing aligns with your investment goals.