Why would my private investors want a Mortgage Pool?
Now let’s focus on why would your private investors would want the benefits of a mortgage pool. Some of the reasons are very similar why –YOU– the mortgage broker or private money lender would want one.
First The first reason – is diversification. We covered that in the last post. Diversification makes sure your investor’s capital is safe.
Second –The second reason – is less paperwork. A lot of your mortgage brokers think that you are investors love your beautiful packages that cost you probably $25 or $30 a copy with all the pretty color bindings and the like. Strangely enough, if you ask your investors whether they keep those or collect them, they will probably tell you they’d rather not have them. So, less paperwork makes you more efficient and life a little easier for your investors.
Third –The third reason is – their money is working 365 days a year. There’s no down time between loans. One of the most frustrating things that investors tell me about is the broker sent me back the proceeds of a loan that paid off and then I had to hound him over and over again: “When is he going to give me another deal; when can I have another deal?” If you look at the investor’s yield, fractionalized over the period of a year, it’s actually quite modest, compared to a Mortgage Pool, where their money is working 365 days a year.
Fourth – The forth reason is – related to safety of capital. we require that all of our funds be CPA audited every year; that our report is sent to the investors and they get the comfort of having another professional set of eyes look at those numbers and verify the reality of them.
Fifth –The fifth reason is – the flexibility your investors get by having the ability to have two accounts within the fund. One account that produces a steady cash flow — some number the investor requires for their household needs — and a second account for automatically reinvesting, or rolling the money back into the fund without any delay as there would be in a traditional model of sending the investor the money and the investor then sending it back.
Sixth –The sixth reason is – The fund does supply some liquidity. THe funds are not an ATM machines, but, because of the massive amounts of money coming in and going out, there usually is cash flow to pay someone out of the fun at some measured pace. That is something we go through in a lot more detail when we work on the architecture of your Mortgage Pool Fund.
Seventh – The seventh reason is – predictability of income is equal to peace of mind. The investors want to know that when they opened that mailbox, that their check will be there ready to deposit in the bank: that there will be no surprises. So those are some of the reasons why I think your private investors would welcome and appreciate a Mortgage Pool and why you should consider one.