Investing in Mortgages

It is our mission to open up the mortgage investment market and position mortgages as a compelling alternative to traditional stock and bond assets in a diversified investment portfolio.

The CMI MIC Family of Funds provides a way for individuals and corporate investors to access Canadian real estate markets and take advantage of economies of scale not available to them as individuals. Investors pool their money by buying shares in a company called a Mortgage Investment Corporation (MIC). The MIC invests these funds in mortgages that generate income through interest rates and fees collected from the borrowers. This yield produces monthly cash flow for its investors.

Professional managers are responsible for all facets of fund operations: sourcing of mortgage opportunities, analysis and underwriting of mortgages, and structuring and facilitating the related legal transactions. The MIC then manages and administers the entire mortgage portfolio, which is comprised of these individual mortgage investments.

CMI MIC Funds were designed to be investor-friendly, where the management team is responsible for all administration and servicing details, so investors can relax while their investment is expertly managed. Investing in the CMI MIC Family of Funds allows you to take part in a sophisticated investment strategy without the need for extensive experience or industry knowledge.

MICs can also be a more secure and safe option compared to investing directly in real estate. When you invest in a MIC, you are investing in mortgages, which are less vulnerable to fluctuating property values. CMI MIC Funds being a private investment entity offers protection against the volatility of the public stock markets.

Advantages of Investing in a MIC

Investing in a MIC spreads the investment across a large pool of mortgages, mitigating the risk from investing in single specific mortgages
Fund managers actively manage the investments and mortgages, providing an investor with a hands-free investment experience
MIC funds are subject to Federal regulations and the provisions of the Canadian Income Tax Act

A MIC generates its return from monthly mortgage payments made by the borrowers. This provides investors a stream of income while their investment is secured against real property.
Under Section 130.1 of the Income Tax Act, taxable dividends paid to shareholders are taxed as interest income. A Mortgage Investment Corporation does not pay any income taxes, provided that we distribute all of our taxable income each year.

RRSP Eligible

Since the dividends paid out from a MIC are taxed as interest income to the investors, investing into a MIC with your RRSP funds could be great way to grow your RRSP portfolio. CMI MIC Funds also offer a DRIP (dividend reinvestment plan), which offers investors a compounding rate of return.

When investing in an RRSP, you are offered certain investment choices, such as mutual funds or GICs. For most investors, the average performance of RRSP investments has been unsatisfactory at best. That’s not to say you have no choice but to accept the status quo.

CMI MIC Funds Advantages

CMI MIC Funds provide a way for individuals and corporate investors to access Canadian real estate markets and take advantage of economies of scale not available to them as individuals. Typical MIC investments include first and second mortgages on residential property.

Low expense ratio due to overarching entity

As CMI MIC Funds are under the CMI umbrella, many of the operating costs that can eat into an investor’s profit are absorbed by the overarching entity. Maintaining the CMI MIC Funds along with its subsidiaries decreases the expense ratio and provides for decreased overhead resulting in lower fees relative to many other MICs. The savings are passed onto our investors in the form of strong net returns.

CMI MIC Funds engage a team of underwriters with both depth and breadth of experience

It is crucial to understand the background and experience of the mortgage underwriting team behind each loan that is processed. Whereas banks generally have relatively inexperienced mortgage underwriters with multiple levels of bureaucracy involved in the underwriting and approval process. CMI MIC Funds engage a team of underwriters with both depth and breadth of experience. This level of expertise adds to the speed at which the loans can be processed while maintaining a high level of due diligence. Not only is this a value-added service for time-pressed borrowers, but it also protects the capital of the MIC investors.

Quicker decisions driven by thorough due diligence

Experience and a reduced bureaucracy provide for quicker decisions driven by thorough due diligence providing for an efficient underwriting process. We strive to maximize returns through the sourcing and efficient management of our mortgage investments.

Prime Mortgage Fund

This more conservative fund minimizes volatility by investing primarily in first mortgages and by capping its loan to value ratio at 65%.
Targeted annual returns of 6-6.5%
RRSP, RRIF, RESP, LIRA, TFSA and RDSP eligible.

Balanced Mortgage Fund

This balanced fund offers moderate risk and volatility by investing in first and second mortgages while capping its loan to value ratio at 75%.
Targeted annual returns of 8-9%
RRSP, RRIF, RESP, LIRA, TFSA and RDSP eligible.

High Yield Opportunity Fund

This more aggressive fund invests primarily in second mortgages with a maximum loan to value ratio of 85%.
Targeted annual returns of 10-11%
RRSP, RRIF, RESP, LIRA, TFSA and RDSP eligible.

Security

Investing in mortgages through CMI MIC Funds protects against risks by concentrating on stable, growing real estate markets across Canada. Some examples of how we mitigate risk include:

Focus on low-risk, residential mortgages that fall outside the traditional bank lenders’ criteria
Extensive experience in coordination with a regimented underwriting methodology
Offering a large, diversified pool of mortgages across different stable real estate markets in Canada
Limiting loan to value (LTV) ratios to amounts that are relative to the specific fund’s investment strategy and overall risk profile

Take control of your investment and gain transparency to where your money is going.

Strong Consistent Returns

All savvy investors understand that there is a positive correlation between risk and return. Our lending activity focuses on real estate markets that are inherently stable with sound economic fundamentals. CMI MIC Funds investors can participate with relatively small amounts of capital and have the opportunity to achieve healthy investment returns while still minimizing risk.

Flexibility

An investment in CMI MIC Funds is held in the form of MIC shares that can, in turn, be held either directly, or in an RRSP, RRIF or TFSA. CMI MIC Funds can assist in facilitating the setup of a self-directed RRSP or RRIF through the trustees it usually deals with. When it comes to liquidity, CMI MIC Funds offer penalty-free redemptions after 24 months, with 90 days’ notice (some restrictions apply).

Investing in Mortgages – Overview