Invest in Real Estate through your registered accounts
Portfolio diversification and alternative investments are a hot topic when talking about investing the money you worked hard for. Gone are the days of using your RRSP’s, TFSA’s and other registered accounts to invest in mutual funds through a financial advisor. Many Canadians are not educated on the fact that you can invest in a variety of options through your registered plans, one of them being real estate.
For years, real estate investing has garnered tremendous returns. There are many ways to invest in real estate but banks don’t have the ability to let individuals invest in this asset class through self directed registered accounts. This means, you have to educate yourself about how you can add this investment to your portfolio.
Private Lending & Trustee’s
Private lenders generally offer loans to borrowers active in the development process, and they have more flexibility in financing programs, typically offering structures that can be customized to the borrowers’ needs. Private lending is asset-backed, meaning that the underwriting team will focus more on the asset than a bank typically would while considering the loan. You can participate in private lending through a mortgage investment fund (MIF) that offers borrowers an alternative to traditional institutional mortgage lending. To use your registered accounts for this type of investment, you need to open a self directed RRSP or TFSA with a trustee (eg: Olympia Trust or Community trust). The trustee is there to facilitate the investment into the MIF.
The Dez Capital Mortgage Fund
Dez Capital has funded $490 Million into 592 mortgages across Ontario to date. Investment into the mortgage fund is available to any eligible resident of Ontario with a minimum investment requirement of $50,000. Qualified dealers (EMD’s) are assigned to determine eligibility and sell units of the investment.
The structure of the fund is set up so purchases are made on the first day of each month and the distributions are paid out monthly, beginning on the 15th day of the following month. Distributions can be paid out as income or re-invested. All income from the monthly distribution is treated as interest . There is no limit to how much you can invest, and the fund allows investment through registered accounts like your RRSP, TFSA, RRIF. The management fee on your investment is 1% per year and if you elect to exit the fund in the first year of investment, you are charged 2% on the amount liquidated.
As with any investment, understand the risks and make sure you’re willing to take them. To learn more about how you can balance your portfolio through investing in a mortgage fund, speak to one of our Exempt Market Dealers.