A mortgage investment corporation (MIC) is an investment company that specializes in financing mortgages. MICs pool funds from investors to finance mortgages, and they are typically used by investors who want to diversify their portfolio or earn a higher return than what is offered by traditional investments. While MICs can be a great way to earn a higher return on your investment, there are some risks involved. In this blog post, we will explore how to mortgage investment corporation so that you can make an informed decision about whether or not this type of investment is right for you.
What is a Mortgage Investment Corporation?
A Mortgage Investment Corporation, or MIC, is an investment corporation that pools money from investors to lend out as mortgages. MICs usually focus on lending to residential or commercial property developers.
The main advantages of investing in a MIC are:
-Diversification: By pooling money from many different investors, a MIC can spread the risk of defaults and help to diversify an investor’s portfolio.
-High yield: Due to the higher risks associated with lending money for property development, MICs often offer higher yields than other types of investments.
-Professional management: The managers of a MIC are typically experienced in the field of real estate lending and can source and evaluate loans for the corporation. This can provide peace of mind for investors who are not familiar with the process themselves.
How do Mortgage Investment Corporations Work?
A Mortgage Investment Corporation (MIC) is a special purpose vehicle that pools together funds from different investors to be used for lending purposes. The MIC then uses these funds to provide financing to borrowers, typically in the form of mortgages.
The main advantage of investing in a MIC is that it provides investors with access to a larger pool of capital than they would otherwise have access to on their own. This can help to diversify risk and potentially increase returns. MICs are typically organized as trusts or corporations and are regulated by provincial securities commissions.
When considering investing in a MIC, it is important to understand how the organization works and what fees are involved. It is also important to do your own research and speak with a financial advisor to ensure that an investment in a MIC is right for you.
Pros and Cons of Investing in a Mortgage Investment Corporation
Mortgage Investment Corporations (MICs) are a type of investment fund that allow pooling of investor resources to provide financing for commercial and residential mortgages. They offer many advantages over traditional lenders, such as higher lending limits, more flexible terms, and the ability to hand-pick investments. However, MICs also come with some drawbacks, such as higher fees and a more complicated process.
When deciding whether or not to invest in a MIC, it’s important to consider both the pros and cons. Some of the main advantages of MICs include:
Higher lending limits: MICs can lend up to $5 million per property, compared to traditional lenders who usually have lending limits of $2-$3 million. This makes them a great option for investors looking to finance large projects.
More flexible terms: MICs are often more willing to negotiate loan terms than traditional lenders. This can be helpful if you’re looking for a longer repayment period or want to structure your payments in a certain way.
Ability to hand-pick investments: When you invest in a MIC, you get to choose which mortgages the fund will finance. This allows you to pick investments that match your risk tolerance and return goals.
However, there are also some potential drawbacks to investing in a MIC, including:
How to Choose a Mortgage Investment Corporation
When it comes to choosing a mortgage investment corporation (MIC), there are a few things you should keep in mind. Here are a few tips on how to choose a MIC:
1. Make sure the MIC is registered and regulated by the Canadian Securities Administrators (CSA). This will ensure that the MIC is legitimate and that your investment is protected.
2. Look at the MIC’s track record. How long has it been in business? What is its history of returns? Does it have any complaints against it?
3. Consider the fees charged by the MIC. Some MICs charge higher fees than others, so you’ll want to compare before making a decision.
4. Ask about the minimum investment amount required by the MIC. Some MICs have high minimum investment requirements, which may not be suitable for everyone.
5. Find out what type of loans the MIC invests in. You’ll want to make sure that the loans meet your investment objectives and risk tolerance level.
