When it comes to investing, there are a few rules you hear often:
“Take the emotion out of it.”
“Always be diversifying your portfolio.”
“Do your due diligence.”
You may tire of hearing them, but these same rules apply to choosing a mortgage investment company (MIC). If you’ve come to the decision that mortgage investment pools are right for you and you’re ready to diversify your investment portfolio with the help of an MIC — congratulations! But your due diligence starts now.
To find a reliable and reputable MIC means understanding the qualities to look for in a top-notch MIC, and knowing what to look for when you do your research.
Understand the Real Estate Market
Before you jump into researching MICs, the first place to look at is the real estate market. Successfully investing in mortgage pools can be directly correlated to how the market is looking. Ask yourself if this is a good time to be considering this kind of alternative investment strategy. Look at local and national publications to see how the housing market is looking. And don’t forget to look at the housing market both locally and nationally to get the full picture.
Take the time to find out what the experts are saying. There are many publications related to real estate and mortgages that can help you create a more detailed picture of the markets you’d be investing in. Look for relevant information in publications like Mortgage Broker News or Canadian Mortgage Trends.
Look at the Data
Data is vital when it comes to making a decision. Look closely at the Canadian Mortgage and Housing Corporation (CMHC) to find essential data related to how real estate markets are performing based on region and type. The aim is to use this data and assess the risks a particular mortgage investment corporation is willing to take, and determine whether you agree with them.
Another excellent source for data is Statistics Canada. This may not speak specifically to real estate, but often, certain economic factors may dictate trends in the real estate markets — especially coming trends. Statistics Canada does have a “housing” specific section that may be of benefit.
Lastly, check out the Canadian Real Estate Association (CREA), which offers a wealth of statistics on the housing market. They can be helpful when it comes to researching a specific community or region and also provide monthly reports you can follow to spot trends.
Google the Specific MIC
You can tell a lot about a company based on what’s being said about them — or what isn’t. The first thing you can do when looking at an MIC is to google their company name and see what happens. The real estate market could be performing well, and your financial advisor could recommend this form of investment, but understanding the company handling your investment capital means understanding what others have experienced. Google can offer up reviews, news articles, and mentions of a company that could be glowing admiration or damning evidence against them. You need to trust the company you’re choosing to invest through, and that means doing a little digging to find out who they are.
Once you have all this information, you can speak with a mortgage investment corporation personally. Based on the real estate market data you’ll now have, see if their strategies and choices make sense to you. It’s crucial that you come into any investment prepared and knowledgeable about that particular market space. And that knowledge and preparedness will spill over into making the right choice about an MIC. By researching and understanding the real estate market they’re investing in, you can feel more comfortable deciding whether an MIC’s strategies will be something you feel comfortable investing in.