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Thread: Using RRSP to lend?

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    Default Using RRSP to lend?

    I don't know if I'm reading this right but can people use their RRSP to lend out as a private mortgage? Found this article below but someone I loosely know said he did this and getting 16 percent interest paid monthly to him for 1 year.

    https://equityapproved.ca/knowledge/...gage%20lending.

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    Yup, you can. PM me if you want help setting it up.

    You need mortgage insurance if you lend “non-arm’s length” but beyond that it’s pretty standard for individual investors

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    Hmm... the last bit talks about mortgage brokers?

    Is @TimLacroix still around?

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    Quote Originally Posted by ercchry View Post
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    Yup, you can. PM me if you want help setting it up.

    You need mortgage insurance if you lend “non-arm’s length” but beyond that it’s pretty standard for individual investors
    Is there a catch? Why wouldn't everyone do this? If someone had 100k in RRSP and they can get 16 percent on it why not do it?

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    Quote Originally Posted by jabjab View Post
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    Is there a catch? Why wouldn't everyone do this? If someone had 100k in RRSP and they can get 16 percent on it why not do it?
    You need to ask yourself why these borrowers can't get access to cheaper capital. That will answer your question

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    Quote Originally Posted by jabjab View Post
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    Is there a catch? Why wouldn't everyone do this? If someone had 100k in RRSP and they can get 16 percent on it why not do it?
    Well… there is risk, also origination and administration costs (typically passed onto the client) but also, you need to find someone willing to pay that, and either they won’t, then you have the hassle of recouping costs via foreclosure (and nothing else, as this would be a no recourse mortgage in this province) or they are responsible enough to pay it back, and will do it quickly enough that this isn’t a passive strategy as you will need to consistently turn over clients

    There is also plenty of competition. I know this market very well, if there is a decent property in a decent area (ie: major urban) there is bottomless funds at sub 65% LTV and under 10% yield… and there is enough money that even at 85% LTV, in 2nd place that 14%+2% fee is market rate. Is there guys out there lending worse? Yup… but those deals are dogshit, and if you only have $100k… I would not put it in that basket

    The other thing to note is that APR cannot exceed 35%, most brokers (and you need a broker as you need to be licensed in mortgages to deal in them) will have a minimum fee, typically at least $2k. Usually one represents the lender and one the client, you can do both but need to disclose the conflict. Then legal costs, and admin costs for whatever trust company you have…

    So basically if you want a yield of 16% on your money you need to lend at least $37k/loan… and the only way you will demand that is high LTV in second place on a weird property or a questionable borrower.

    Plenty of MICs out there were you just give them your RRSPs and sit back and get a solid 8-11% YoY with your money spread over 1000s of properties and borrowers

    Non-arms length on the other hand is an interesting proposition… as you can essentially loan yourself (or family) money and dictate your rate of return into a registered account… but only one insurer will insure it, and that’s an additional cost of course. Few parameters that need to be met as well (like you need to be able to lend the full loan amount for the property). That makes it difficult if you don’t have a huge rrsp to begin with
    Last edited by ercchry; 03-06-2024 at 10:30 PM.

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    Everyone loves free lunch.
    Quote Originally Posted by killramos View Post
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    You realize you are talking to the guy who made his own furniture out of salad bowls right?

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    Quote Originally Posted by ercchry View Post
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    Plenty of MICs out there were you just give them your RRSPs and sit back and get a solid 8-11% YoY with your money spread over 1000s of properties and borrowers
    More on this...
    _____ASP______

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    Quote Originally Posted by asp integra View Post
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    More on this...
    Calvert Home mortgage - originally Alberta, exposure to other provinces now. Good group, smart guys with great risk mitigation
    Altawest - also originally Calgary, have gone through some management changes (founder retired)
    Fisgard - big BC group, lends in most markets
    VWR - same idea as fisgard
    Capital Direct - household name with all their advertising
    Amur capital - parent of another household name - they put all the high risk stuff with private investors, the funds they manage are very conservative, but half their exposure is Ontario about $1b AUM between their 3 funds

    Tons of smaller guys out there too, and private funds… but those are usually closed off to a handful of big money investors.

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    Quote Originally Posted by jabjab View Post
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    Is there a catch? Why wouldn't everyone do this? If someone had 100k in RRSP and they can get 16 percent on it why not do it?
    r/borrow if you think you're so smart.

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    Quote Originally Posted by ercchry View Post
    This quote is hidden because you are ignoring this member. Show Quote
    Calvert Home mortgage - originally Alberta, exposure to other provinces now. Good group, smart guys with great risk mitigation
    Altawest - also originally Calgary, have gone through some management changes (founder retired)
    Fisgard - big BC group, lends in most markets
    VWR - same idea as fisgard
    Capital Direct - household name with all their advertising
    Amur capital - parent of another household name - they put all the high risk stuff with private investors, the funds they manage are very conservative, but half their exposure is Ontario about $1b AUM between their 3 funds

    Tons of smaller guys out there too, and private funds… but those are usually closed off to a handful of big money investors.
    Can you access these inside an existing rrsp or have to deal with them directly?
    _____ASP______

    current ski quiver:
    park, all mtn 181 ON3P Kartel 98
    park,all mtn: 181 Armada AR7
    big mtn, pow: 185 Armada JJ

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    What could possibly go wrong
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.
    Quote Originally Posted by Yolobimmer View Post
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    guessing who I might be, psychologizing me with your non existent degree.

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    Quote Originally Posted by killramos View Post
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    What could possibly go wrong
    anytime someone asks me to borrow money or invest in an opportunity
    Originally posted by rage2
    Shit, there's only 49 users here, I doubt we'll even break 100
    I am user #49

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    It's funny when people think they've found some type of loophole or hack to get high return/low risk. Risk/return are always directly correlated (for the everyman investor at least). It's like the laws of physics, it doesn't change.

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    The one weird hack financial planners don't want you to know!
    Quote Originally Posted by killramos View Post
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    You realize you are talking to the guy who made his own furniture out of salad bowls right?

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    Quote Originally Posted by ExtraSlow View Post
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    The one weird hack financial planners don't want you to know!
    private equity
    not for us poor ppl lol
    Originally posted by rage2
    Shit, there's only 49 users here, I doubt we'll even break 100
    I am user #49

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    Quote Originally Posted by bjstare View Post
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    It's funny when people think they've found some type of loophole or hack to get high return/low risk. Risk/return are always directly correlated (for the everyman investor at least). It's like the laws of physics, it doesn't change.
    I agree with this...although the key word is "everyman investor". There is a shit-ton of stuff going constantly that "breaks" the risk return correlation, but they would never be accessible to the public.

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    Hmmmm... taking my retirement savings and growing it by lending to someone who cant get money from a bank, but really really promises to pay me back sounds like a solid plan.

    brb shopping for cardboard boxes to live in when I retire
    Tap, Rack, BANG!

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    Quote Originally Posted by littledan View Post
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    Hmmmm... taking my retirement savings and growing it by lending to someone who cant get money from a bank, but really really promises to pay me back sounds like a solid plan.

    brb shopping for cardboard boxes to live in when I retire
    the sleight of hand in these things is the idea that you can "diversify" by having a lot of mortgages bundled together. "Our MIC is great because we have thousands of mortgages, so the risk is less".

    It's the type of thing that sounds good to unsophisticated investors.

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    Quote Originally Posted by Buster View Post
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    I agree with this...although the key word is "everyman investor". There is a shit-ton of stuff going constantly that "breaks" the risk return correlation, but they would never be accessible to the public.
    Yes. And I have taken the giant leap to include OP in the "everyman investor" category. Crazy, I know.

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