The Money Mustache Community

Learning, Sharing, and Teaching => Investor Alley => Topic started by: MoneyCashFreedom on May 23, 2016, 11:17:37 AM

Title: 2nd mortgage lending
Post by: MoneyCashFreedom on May 23, 2016, 11:17:37 AM
Hey everyone,

I currently have two mortgage investments - one paying 8% which is a syndicated mortgage investment for a large commercial project in Canada (where I live).  The other one is a one-to-one 2nd mortgage investment, where I'm providing capital to a guy and getting 12% return.  I'm pretty happy with both, especially the latter.  Not just because of the higher ROI, but also because there are zero hidden fees and it was just a much cleaner investment entry with compared to the syndicated mortgage which had all kids of fees and my money was tied up for months before I saw and dollars.  That said, the 8% one is way less risky than the 12% one since it's not a one-to-one mortgage.

I'm currently sitting on a nice pile of cash and want to do another one of these sorts of investments, or rather just any investment that will pay me this sort of ROI.  However, I'm a bit scared to dump more money into investments where my asset is another's liability.  Especially when it's a one-to-one.  And especially in a world where it feels like the bottom could fall out of the markets at any moment.  And especially in Canada, where the housing market is really out of control and didn't have much of a correction in 2008 like much of the rest of the western world.  But perhaps I'm being too risk averse (?).

So... I really want to put my stockpile of cash to work so I can help my wealth snowball, but do you think I should look at other options?  Part of me wants to get into gold as a safe haven, but on the other hand I really like something that pays me on a monthly basis.  I would go for dividend plays, but dividend yields are pretty pathetic right now, and I'm not comfortable going long stocks at the moment, give they are very close to all time highs and we're due for a substantial pullback.

Thoughts or suggestions?