The key to a good relationship is when it mutually benefits all parties involved — and it’s no different with MICs. Mortgage Investment Corporations (MICs) can benefit both the borrower and investor in a variety of ways.
An MIC offers investors a chance to diversify their portfolio, invest in alternative investment strategies, and grow their investment through the real estate sector with a little more protection. In return, this same MIC allows the borrower to fund projects that traditional lending methods will not.
The key to a sound MIC is understanding the benefits that motivate both investors and borrowers and ensure both parties are satisfied.
How Do MICs Benefit Investors?
As an investor, or “lender,” the three main benefits of an MIC are:
- Diversification of an investment portfolio,
- Access to alternative investment strategies and forms, and
- Reasonable returns with the additional safety of an investment manager controlling the fund.
The benefits of investing in MIC-run mortgage pools is the protection the management corporation offers as well as the short-term nature of these mortgages. This ensures that the investor’s money is always working in new projects and collecting the higher interest rates characteristic of these kinds of mortgages.
How Does an MIC Benefit a Borrower?
It may seem like all of the benefits here are for the investor. However, the borrower can capitalize on their own interests with MIC-run mortgages.
These borrowers are generally those who don’t qualify within the traditional lending methods and criteria. This means they have to find funding elsewhere for their real estate projects. Enter MICs. Borrowers will end up paying higher interest rates with a mortgage through an MIC, but these mortgages are generally for shorter-term projects such as commercial real estate development. MICs make these real estate projects possible by offering a method of funding when traditional financing is unavailable.
Both borrowers and lenders benefit from the investment and financing relationship that MICs offer. The main factor that decides whether a mortgage investment corporation is beneficial to both parties or detrimental is the quality of the investment manager and management that they offer. This is why it’s vital to choose a qualified and reliable mortgage investment corporation.
At Cooper Pacific, we’ve been offering reliable investment management and advice to our lenders and borrowers for over 25 years. If you’re an investor or borrower who’s looking for a trustworthy MIC, get in touch with Jordan on our team today.