What Is a Mortgage Pool & How Do You Invest in Them?

A mortgage pool isn’t a place to take a dip on a hot summer day, but it is a great place to get your toes wet in alternative investments. For sophisticated investors looking for something more advanced than your basic investment strategies, a mortgage pool can be a welcome option. If you’ve never heard of mortgage investment or a mortgage pool, however, it can be a little daunting to plunge into head first.

 

So What Exactly Is a Mortgage Pool?

A mortgage pool is a form of alternative investment that provides mortgages to those who may not be approved through usual methods. Essentially, a group of investors pool their money together and invest in projects that range from commercial to residential property. This pooled money, or a mortgage pool, provides mortgages to these types of projects. In turn, there are fees and interest paid back on this loaned money, which serves as growth on the investment that the investor put in the mortgage pool.

Think of it as an actual swimming pool. You get together with a bunch of your friends and decide to fill the pool, but you don’t have enough water to fill the entire pool on your own. So all of your friends pool the water they do have together to fill the pool. Then, people come to the pool to use this water and pay a fee which you receive back for your original investment of water. Water, in this scenario, is money, in case that was unclear.

 

But How Does This All Get Organized & Who Manages the Pool?

Mortgage investments aren’t something simple that can be set up and managed overnight. You can’t simply organize a mortgage pool with a group of your investing friends, then lend out to a number of viable projects. Instead, a mortgage investment corporation (MIC) handles your mortgage pool and all the technical work behind it. Sophisticated investors should research reliable MICs to handle this. As the investor, you invest in the mortgage pool, and your money is then used to fund a number of different projects. This spreads out the risk amongst a few projects instead of investing in a single real estate endeavour.

To invest in a mortgage pool, you need to start by speaking with a reputable MIC. Find out your comfort level with this form of alternative investment first. Next, with your MIC, outline an agreed-upon strategy that includes strategies the company has in place, your goals, and the initial investment amount. Mortgage investment is not a strategy for every investor. Speaking with someone at a MIC is a great first step to understanding all that’s involved.

If you’re interested in learning more about mortgage investing and the mortgage pool, our team at Cooper Pacific is happy to help you better understand the space before taking the plunge. Get in touch with Jordan today to learn more about mortgage investment strategies and alternative investments.