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Private Lending

WHAT IS PRIVATE LENDING?

Investing in real estate passively using your wealth! You provide the loan to a qualified borrower with a piece of real estate being security and collateral for the loan.
You can lend using:
  • Cash
  • Registered Retirement Savings Plan (RRSPs) including Locked in Retirement Accounts (LIRAs) and Registered Retirement Income Funds (RRIFs)
  • Tax Free Savings Accounts (TSFAs)
  • Unsecured and secured lines of credit

Responsibilities

  • Understanding the risks and rewards of providing mortgage financing on real estate
  • You will need to find, screen and accept applications for mortgage financing
  • Ensure the property is deemed acceptable
  • Prepare and negotiate the terms of the mortgage
  • Ensure the funds as available as agreed upon and administer the mortgage including repayment, renewal, annual mortgage statement etc.
Don’t worry! You don’t have to do it all by yourself. We are here to help.

Advantages & Disadvantages

Advantages

  • The real estate as security since you are registering a mortgage charge on title
  • Opportunity to diversify your investment portfolio
  • You can invest in real estate passively
  • You get to decide the terms (interest rate, length, up-front lender fee)
  • Generally all legal fees are paid for by the borrower
  • The return on your investment (1sts from 6% to 12% per year)

Disadvantages

  • Can be complicated & difficult to decide what constitutes a good borrower & property
  • You will have to collect monthly payments
  • Liquidity & Timing - you are legally bound by the terms of the mortgage
  • Downturn in housing market
  • Default Proceedings: worse-case scenario default occurs that results in a loss of your principle and interest
Balancing these two are what helps you create your criteria for lending.

Your Returns

1st mortgages: overall return of 6% to 12% per year typically broken down into:
  • Monthly payments to you of around 5% to 9% interest that may include some principle
  • Up front lender fee of 1% to 3% of the amount that has been borrowed
2nd mortgages: overall return of 10% to 15% per year typically broken down into:
  • Monthly payments to you of around 10% to 12% interest that may include some principle
  • Up front lender fee of 1% to 5% of the amount that has been borrowed
The overall return will depend on your lending criteria

Tips for Success

  • Start when YOU are ready
  • Build a strong power team
  • Ensure you are comfortable with the risk (and rewards)
  • Remember, YOU are in the driving seat
  • Go with your gut...if it doesn't feel right, it isn't
  • Stay focused and stick to your plan - business, financial, strategy, exit and acquisition - ALWAYS
  • Due diligence, due diligence, due diligence!
  • This is a business decision and not an emotional decision
  • Only accept a complete Investment Proposal before proceeding...ALWAYS!
WATCH OUR WEBINAR
My wife and I cannot begin to properly express how happy, and thankful, we were to be introduced to Angie and Victoria. They helped us navigate a challenging refinance and not only got us the exact result we were hoping for, but they were a calming and reassuring presence throughout the entire process. Their dedication to customer service is unmatched. They really do go above and beyond to help their clients. I feel confident in recommending Angie and her team to any of my friends and family and we will absolutely be using them again in the future.
DW
Angie and Victoria of The Pettyjohn Team are an absolute pleasure to work with! Both are professionals in the field, and no matter what questions I have they always provide me with the most accurate and honest answers. They are also great communicators, and they always put the needs of their clients first. I'd highly recommend The Pettyjohn Team to my family and friends for all of their mortgage needs. Thank you so much, Angie and Victoria!
KS
Angie is kind, knowledgeable, and level headed. She will meet your needs quickly and expertly explain everything to be sure you understand. Highly recommend.
KW
Angie and Victoria are an absolute dynamic duo not to mention they deeply care for each of their clients. They helped us through the mortgage process and were extremely responsive and knowledgeable. I highly recommend them!!
NR
I recently had the pleasure of engaging with The Pettyjohn Team of Mortgage Alliance. Angie and her team were very responsive to our questions and provided a clear plan to achieve our goals. Drawing on her extensive experience, Angie was also able to provide guidance and answers to questions regarding our less than conventional situation of considering pulling equity out of our primary home to purchase a secondary home. Most importantly, Angie demonstrated professionalism, integrity and resourcefulness that extends to finding the best possible solution to serve the needs of her client. I highly recommend The Pettyjohn Team of Mortgage Alliance to anyone looking for the best solution for their mortgage /financing needs.
CH
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Sherwood Mortgage Group License Number: 12176 

529 Wilson Avenue, Toronto ON M3H 1V1

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