Capital Direct - Investing in Mortgages - 8.7% yield?
Apparently they have yielded 8.7% over the past 7 years for their investors. I am thinking about setting up a TFSA account with them with 10k and reinvesting the quarterly dividends as a "test."
Feb 18th, 2016 5:10 pm
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I have no experience with the company you were dealing with, however did deal with Carevest and their MIC fund. They would actually provide each investor a list of all the mortgages in your portfolio, whether it was first or second, and what the interest rate was. There was quite a big variance in the rates charged to each client. Therefore, I would inquire with them as to a listing of the mortgages that are included in your investment and what the details of each are (first or second, etc.).balbas662 wrote: ↑Feb 19th, 2016 2:24 pmWell I don't believe it's a scam. With peer to peer type loans and 2nd, 3rd mortgages interests rates are a lot higher. Far as they say all the mortgages they give out are secured by homes for people who have bad credit or already are too leveraged out for a typical bank. I think if you inquire about rates they can be 12-13% and with that they have room for defaults, a profit for themselves and what they pay you out.
More so just looking to see if anyone has invested with them and what their experience was like.
Feb 20th, 2016 4:31 pm
Are the distributions from TSE:MKP considered interest income or are they eligible dividends that are subject to a dividend gross up?thebigmacd wrote: ↑Feb 18th, 2016 8:07 pmI have a feeling they are leveraging investors' money. Typical commercial rates right now vary from 4-6.5% from what I can find (nearly impossible to find numbers). So if they are leveraging 2:1 I can see an 8.7% return.
For example, I own MCAN Mortgage Corporation (TSE:MKP), which loans out on many types of mortgages. Their return on equity is >11% and their current dividend yield is 9.39% at a 78% payout ratio.
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capital one investments aka 'income trust one'
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These types of firms don't have 'regular' mortgages... they do the equivalent to payroll loans but for housing instead of payroll (ie short term relatively high amounts using real estate instead of a paycheque). So, the rates that they charge is much higher than the standard 5 year.