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February 19, 2023 - 9:00 AM
It’s RRSP investment season, and you might be looking to make a contribution for the 2022 tax year. Can a mortgage broker help with finding investments which produce excellent returns and cash which can be added to an RRSP?
We asked Wes Rosso, of Rosso Mortgage in Kelowna, to explain how he helps clients create self-directed RRSPs that can be used to lend on mortgages (you may have heard the term private lending). Another branch of private lending is called bridge financing. Typically these deals are a very short duration (2-10 weeks).
Some - but not all mortgage brokers – are experts in providing individuals with opportunities to invest in private loans which can garner very lucrative rates of returns. With the stock market volatility we’ve seen in 2022, why not consider this?
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Bridge loans can be a more attractive investment than more traditional options. Most people usually turn to their bank or an investment advisor and ask for options. GICs and Mutual Funds are very often what they are sold. GICs can be very low-risk, offer guaranteed returns, but the rate of return is low. Investing in mutual funds will likely be more risky - and after factoring in management fees (which they charge every year regardless of whether they made you any money), your annual return may not be much better.
Currently, Rosso says that clients can expect rates of return for funds lent on property very easily in the range of 9-12%. Does higher return mean higher risk? That’s what they say right? Not in Rosso’s opinion. He would invest funds with a property as security at 65% loan to value. (Loan to value or LTV is one means of measuring the risk of a loan). If the borrower of these loans was ever to default, it’s the property that would be looked at to liquidate to recoup the loan.
Recently Rosso has invested clients’ funds in short term bridge loans with returns up to 24%. You do not currently have to have a mortgage to consider these investments. Returns like this should give you pause to look at alternate investment options and perhaps never look back. Rosso gives Canadians a new perspective on other investment options out there. Give him a call at 250-317-5360 today.
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