Mortgage investment has just become a whole lot easier—not to mention less convoluted.
Fundscraper is a Toronto-based government regulated online platform that conflates technology, expertise and stringent compliance measures to facilitate financing for a range of real estate projects from large commercial developments to first, second, or combination mortgages with terms between one and three years. What distinguishes Fundscraper is the use of technology to reduce costs and, most importantly, protect investors.
The automated process is a breeze—so much so that Fundscraper eschews traditional hard copy brick and mortar programs in favour of an easy-to-use digital platform. Accepting funds from everybody from individuals to major institutions, it has removed tedious obstacles and streamlined the real estate investment process, especially for property-backed securities in an effort to abet attractive returns.
To find out more about Fundscraper’s anchor investments, click here.
“What we do is provide not only a platform to make opportunities available, but we enable the acquisition of that investment. We do the heavy lifting for you!” said Gregory Colford, Fundscraper’s Executive Vice President and Chief Compliance Officer. “We essentially use tools recognized under Ontario securities laws and we do it all online. Throughout the process, any potential investor is able to pick up the phone and talk to a dealing representative about the investment. If we notice during the sign-up process that a particular investor is having difficulties, we can actually reach out to them through the website. The way our website is designed, and because we can facilitate compliance online, we can basically accommodate investors that other platforms might not be able to simply because of costs.”
Fundscraper has made the Know Your Customer (KYC) process efficient, allowing for smaller subscriptions so that, should investors want to invest as little as $5,000 or $15,000, they can do so with surprising ease.
“Generally, the platform is there to do that, and not just with respect to our own product, but shelf product we carry as well,” continued Colford. “We also act on behalf of other mortgage investment entities that are looking to us for a capital solution as well as compliance and as a fully registered exempt market dealer, we assist them in distributing their investment product to subscribers through our platform.”
Fundscraper typically offers 11% returns on second mortgages at 80% loan-to-value (LTV); 8.5% on second mortgages at 70% LTV; 8.75% on second mortgages at 75% LTV; 10.5% on second mortgages at 80% LTV; and it pays investors the principal and interest on their pro-rata portion of the corresponding mortgage investment.
“Imagine sitting at Starbucks and you just got a $15,000 bonus and think to yourself that this year you’d like to put your money into real estate —you would come onto our website and, once we qualify you as an investor, go to our opportunities page and, like in a supermarket, peruse different investment options and then select one or more that fit your bill.”
Investors can, for example, put $5,000 into bridge financing for an 8% ROI, then put another $5,000 into a second mortgage on a house in Toronto’s tony Rosedale neighbourhood returning 11% per annum.
“As you continue walking through our ‘supermarket,’ you might be impressed with a strip mall development where the developer has put up an opportunity to invest in second mortgage financing at 14%,” said Colford. “It’s not uncommon to have 12-14% on those.”
Until around two decades ago, direct real estate was generally considered an alternative investment to traditional stocks, bonds, pooled funds and cash. However, it has since become what Colford calls an “anchor investment for any well-planned investment portfolio.”
“The benefit of owning individual mortgages is it stabilizes the portfolio from unforeseen volatile swings,” he said. “For adventuresome investors, having some of their hard-earned savings in private property through mortgages is just plain smart.”
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