At ABFS Consulting, our goal has always been to bring our investment clientele the best income producing opportunities in the Alberta residential real estate market. The market is continually evolving and our company shifts with the changing landscape. As we welcome the New Year, we are proud to add the Mortgage Purchase Program (MPP) to our selection of investment strategies.
Did you know that you can invest like your bank does?
Just like a bank, you can lend your funds to a homeowner and, in return, receive a signed mortgage and a monthly payment while holding security against the title of the property.
Mortgage ownership is an incredibly secure form of investing. Essentially, you are the bank and the client is the borrower. You can purchase mortgages with your own cash, as well as with your RRSP. By purchasing a mortgage through our program, we administer the investment and provide monthly mortgage payments directly from the homeowner to you.
A roof over your head is a necessity in Canada, and with the more recent and stringent mortgage regulations, there are now a greater number of Canadians seeking alternative mortgage solutions beyond those offered by the major banks. Private lending has always been an option for homeowners and we are noticing it take on an even greater role in the lending industry. Through our dedicated foreclosure assistance program, we have identified and developed a niche program that provides real estate investors safe, stable returns of 6% to 9% interest per annum.
Why Purchase Mortgages?
Today’s investment landscape in Alberta is far different from a few years ago. Alberta has been in a difficult financial position since 2016. Return of capital is more important than return on capital. Our mortgage purchases achieve both objectives.
Through years of real estate consulting experience, we have developed a unique investment program that sources pre-foreclosure property. When we locate a viable mortgage purchase opportunity, we complete a rigorous risk analysis to determine if both the borrower and the mortgage meet our stringent investment criteria.
Through our experiences assisting homeowners through our foreclosure assistance program, we know that many of these homeowners are good people that have hit some sort of speed bump in life, or their bank has chosen not to renew their mortgage. Many of them are employed but are simply not able to pay the bank out in one lump sum often in the range of $100,000 – $800,000.
Why Mortgage Purchases Through ABFS Consulting?
The advantage that our company brings over the major banks is that we can be far more nimble and creative with our solutions than what the bank can. An investment opportunity arises because we can provide foreclosure solutions they cannot get anywhere else. Through our Mortgage Purchase Program, we are able to review their history and develop a payment program that works for their budget. We are also able to test whether they are able to sustain those payments for several months lowering the risk to an investor.
Once a prospective homeowner passes a clear payment history period, we are then able to test the true value of the property against the current housing market. This step helps us identify if there has been a shift in the market since the time they entered the program. This entire system provides a mortgage purchaser with the ability to purchase mortgages at the lowest price possible with the fewest possible risks.
Yet another unique protection for an investor looking to purchase a mortgage is that should the borrower fail to make payments, the investor can immediately pick up where the past foreclosure left off and sell the property to regain their capital. This can save a lot of time and money versus having to start a foreclosure from the beginning.
Finally, should the borrower or market not perform, you also have the option to just rent the property out as a traditional rental. Since you own the 1st mortgage, there is no one ahead of you on title waiting to be paid. You can collect 100% of the rent cheque and wait for the market to improve.
The added benefit of a mortgage purchase through ABFS Consulting is that it is a positive transaction that helps you build wealth through real estate while assisting a qualified homeowner to save their home from foreclosure. As always, our office handles all of the professional, legal and administrative tasks required for the transaction, and maintains your file from start to finish.
How are homeowners qualified?
A qualifying homeowner must:
- Be fully employed and earning a stable income
- Pass certain key debt to servicing ratio metrics to participate in the program
- Have sufficient equity in their home, as confirmed through an independent and professional market analysis
- Successfully complete a 3-month payment sustainability period with our office before becoming fully eligible
FREQUENTLY ASKED QUESTIONS FROM PREVIOUS INVESTORS/ACLs
How is this different from the previous Armchair Landlord (ACL) program?
The key factor is that this is a mortgage purchase and not a property purchase. Rather than qualifying for a mortgage to purchase a property, you are funding the mortgage itself in the same way the banks do. The amount of capital required is higher but the risk profile of the investment is lower.
What if I prefer the benefits of the ACL program?
If after a few months the mortgage borrower proves they can make their mortgage payments, and if their payments would be reduced by employing our previously developed ACL program, then we can migrate the borrower over to the traditional ACL program at a later date. A combination of these two programs on the right opportunity can provide superior investment results!
Does this mean we are no longer running the ACL Program?
No. There is still a lot of lucrative benefits to property purchases through the ACL program for our Armchair Landlord investors and Tenant-Buyers. It has been a tried and true investment program of our company and has created a profitable investment portfolio for many of our current investors. We will continue to provide new ACL opportunities for our pool of qualified Armchair Landlords as they become available. However, due to changes in the Alberta economy and housing market, we have seen a drop in the number of properties that meet the stringent criteria required for our Armchair Landlord investors. The flipside is that we have seen an increase in qualified mortgage purchase opportunities as the banks have tightened their lending guidelines nationally to contain markets outside of Alberta. As our provincial economy makes a slow rebound, we expect the Armchair Landlord opportunities to increase once again. There is always a good way to invest in real estate if you know where to look.
If you are interested in growing your retirement nest egg through mortgage purchases, please contact us. Through our specialized network of clients, professionals, and expertise we can help you build and diversify your real estate portfolio to help you realize your financial goals.