You probably already know about the importance of spreading your capital across a number of different investment types, such as stocks, bonds and mutual funds.
Diversifying your holdings lowers your risk of overexposure to a single investment - the classic ‘all your eggs in one basket’ scenario - particularly during market downturns. At the same time, it allows you to take advantage of a wider range of opportunities. A well-balanced mix of different asset types typically leads to higher, more consistent returns over the long-term.
But what if you wanted to put your money into real estate? Doesn’t that mean being tied to a particular property in a certain area?
Well, it doesn’t have to be that way if you are a private mortgage investor and put your funds into providing financing for properties, rather than actually owning the actual bricks and mortar. Mortgage investing allows you to avoid the responsibilities, risks and costs of being a landlord while giving you the flexibility to invest across geographic regions.
“Geographic diversification is a critical strategy for reducing risk and enhancing returns in mortgage investing,” says Chris Baker, vice president, investment sales for CMI Financial Group, a leader in the private mortgage investment sector. “Unlike traditional real estate investing, which often ties an investor to a single property or region, mortgage investing allows investors to spread their capital across multiple regions, cities or even provinces.”
This helps reduce the risks tied to localized market conditions, economic fluctuations and regulatory changes by ensuring investments are not concentrated in a single area.
It also enhances long-term portfolio performance and stability, making it an essential strategy for mitigating risk and increasing the potential for consistent, compelling returns.
That ability to go farther afield and invest outside of urban markets - away from the traditional areas of real estate traffic - is key.
“Private (mortgage) lending activity is concentrated in Ontario and British Columbia, particularly in larger cities such as Toronto and Vancouver, where competition among lenders is high. Yields have been compressed, as a result,” says Baker.
“Diversifying outside of these areas enables mortgage investors to tap into markets that are often overlooked and generally have less competition, but experience rising demand for lending, which presents untapped opportunities for higher yields.”
So, do all private mortgage companies have the ability to identify those promising places for investing?
“Few have the nationwide reach to offer the full benefits of geographic diversification,” Baker says. “Many are regionally focused and may lack the infrastructure to analyze and operate in multiple markets across the country.”
What sets CMI apart is its national footprint and deep market expertise, offering a diverse range of mortgage investment opportunities across Canada and providing investors with exposure to key regional markets. And as a full-service private mortgage firm, CMI supports investors throughout the entire process—from market analysis and deal sourcing to ongoing management and monitoring—ensuring a seamless and comprehensive investment experience
“Partnering with a premier, private mortgage firm such as CMI not only provides valuable insights into regional markets and helps identify a range of options for investors, ensuring a well-diversified portfolio, it eliminates the need for investors to conduct this analysis or to source – and manage – their own mortgage investment opportunities,” Baker says.
CMI Financial Group is a non-bank financial services provider dedicated to helping investors achieve competitive fixed income returns for their investment portfolios by sourcing high quality mortgage investments - backed by real estate - that match their investment objectives and risk tolerance.
For more information about the benefits of mortgage investing and determining if it is the right investment strategy for you, visit investments.thecmigroup.ca
