One of the reasons we started Mortgage Vintage, Inc. was to personally invest in the asset class we know best, Mortgages. In our lifetime of investing we’ve never been able to get consistent returns from Stocks, Bonds and Partnership investments. A well executed Trust Deed pays interest monthly and earns 9% – 12%. A 10% yield doubles the invested money in 7 years. A double in 7 years! This is the kind of consistency I want and for a portion of my portfolio. Rolling the dice on some of your money is fine, but not all of your money. 10% to 20% of your portfolio needs to be invested in a vehicle that provides consistent returns.
Consistency also comes from selectivity. The Company will be highly selective in its lending, demanding higher rates of return as well as higher credit standards in the form of lower loan-to-value ratios and income verification to mitigate risk.
Mortgage Vintage principals have invested in Limited Partnerships, REITs, Stocks, Bonds, Money Markets, Mutual Funds, Commodities, Real Estate and many other investments. We have never before been able to fully know the risks involved and assess the risk/return like we can with trust deeds. Here are some transparency concerns with some of these other investment types:
- Stocks – false transparency – no one knows what’s really going on at large public companies
- Mutual Funds – What are the real fees? Large loads and inefficient distribution reduce returns
- Bonds – Need to trust the rating agencies. Who pays the rating agencies? The Bond issuer. Hmmm. Is that a conflict of interest?
- CDs – safe but artificially low returns – 1-2%
- Limited Partnerships: Potentially attractive IRR’s but higher Loads, risk and distribution costs shave real returns
Mortgage Vintage’s proprietary technology and platforms give Investors confidence in the Company’s evaluation, selection and operational processes so that they can simply invest in the transaction without direct involvement in the loan process.
Any good investment advisor will recommend a varied mix of investments to increase an investors overall return while simultaneously lowering their risk. A well-diversified investment portfolio should consist of traditional stocks, bonds, mutual funds, and CD’s as well as alternative investments such as real estate, trust deeds, and mortgage funds. While stocks and mutual funds sometimes offer a high rate of return, they carry with them a higher risk. On the other hand, bonds and CD’s have much lower returns but much lower risk. A good middle ground to balance out the risks and returns in your portfolio is trust deed investments.
Since trust deeds are secured by real estate, the underlying collateral provides equity and capital protection against a default. These investments are an excellent way to diversify your portfolio and increase your overall return while reducing your exposure to correlated asset classes. It is imperative to understand that trust deed investments are not insured like CD’s or Money Market accounts; instead they are secured by real estate and are subject to current market conditions.