Why Choose to Invest Through a MIC?
Mortgage Investment Corporations are creatures of the Income Tax Act of Canada. They are unique corporate structures that allow for the flow-through of interest income and capital gains to their investors.
Superior Rate of Return
By consolidating a pool of mortgage investments through a MIC, investors will typically enjoy a safe return in excess of GIC’s or other bank deposits.
The average quarterly dividend paid to Dundarave investors over the last 10 years (2010-2020) has been 7.14%. Investors who re-invested their dividends each quarter compounded their earnings for an average annual return of 7.33% over the same period. The average quarterly dividend paid to Dundarave investors over the last 3 years (2018-2020) has been 7.73%. Investors who re-invested their dividends each quarter compounded their earnings for an average annual return of 7.95% over the same period.
Every good investment strategy should include different types of investments to reduce exposure to the volatility associated with individual market segments. Mortgage investing usually provides consistent returns that are not subject to other major market indices. Many investment advisors recommend clients hold a percentage of their portfolio in mortgages to balance risks in other market segments. Dundarave Mortgage Investment Corporation provides smaller investors with an opportunity to participate in real estate mortgage investing while minimizing risk and preserving capital.
Unlike some other investments, mortgage investments are secured by tangible assets that you can “touch and feel”. Dundarave mortgages will not exceed a percentage of the appraised value of the real estate security, commonly referred to as the “Loan to Value Ratio”. As none of our mortgages will be for an initial term longer than 24 months, Dundarave can manage the risk in the event of declining values.
For the purpose of risk comparison, consider a mortgage investment today in the amount of $150,000. Under our typical investment criteria, Dundarave would only fund that loan on a 75% Loan to Value Ratio, requiring the borrower to grant a first mortgage on a real estate property appraised at $200,000 or greater. Let’s say that in 2 years, property values declined by 25%, the initial $150,000 investment would still be intact.
Investors in Dundarave have an investment in mortgages that have a clear and stated rate of return on investment at the time they are made. Investors and borrowers have clear understandings of the terms and the obligations. If the borrower defaults on a payment, interest and penalties accrue and if necessary, foreclosure proceedings are undertaken to protect your investment.
A MIC investment provides a constant and reasonably predictable rate of return. In that sense, they are much like a Bank Term Deposit or a Government Insured Certificate (GIC), except the return on investment is much better.
In accordance with our Investment Philosophy, Dundarave will only fund borrowers with a demonstrated ability to repay their loan. This means that borrowers will be required to make regular, periodic payments of interest. This provides the steady income stream to the MIC that is paid out to Dundarave’s investors on a quarterly basis (or reinvested if so directed by the investor.)
Investors are provided with quarterly statements. Audited financial statements are provided to investors annually, and all are invited to attend an annual shareholders’ meeting.
Dundarave Mortgage Investment Corporation has a team of experienced real estate professionals to guide and direct investment decisions. Day to day management is provided by Dundarave Management Ltd., the management of which has decades of legal and mortgage brokerage experience.
All details of the mortgage investments are handled by these professionals. Investors are secure in the knowledge their investment funds are being professionally managed and administered. This is an essential element to a truly “passive” investment.
Low Management Fees
The management fees are set out in the Offering Memorandum in a transparent manner. Management fees are only earned on funds that are actually invested and earning returns for investors. Should a loan become non-performing, management fees are not collected for this loan during this time.
Audited Financial Statements
Dundarave Mortgage Investment Corporation undergoes a rigorous annual audit and has its financial statements prepared by the auditing firm. Investors can be assured that every effort is made by management to make Dundarave’s financial information clear and accessible to its investors.
To invest in Dundarave Mortgage Investment Corporation (“DMIC”), the investor purchases Class “A” redeemable preferred shares in DMIC. This investment process is regulated under the Securities Act (BC) and must be done through a licensed exempt market dealer. Western Exempt Market Dealer Services Inc. (“WEMDSI”) is a licensed exempt market dealer in British Columbia and is 100% owned by the management of Dundarave Management Ltd. (“DML”). DMIC retains the services of WEMDSI to facilitate the investment process. (WEMDSI does not offer investment opportunities other than DMIC.) Given the common ownership and management of DML and WEMDSI, there is a potential for conflicts of interest. While there are policies and procedures in place to avoid conflicts and to assess if an investment is suitable, prospective investors in DMIC may wish to get advice from an independent financial adviser or securities dealer before they consider purchasing these connected securities through WEMDSI.
The Office of the Registrar of Mortgage Brokers at the British Columbia Financial Services Association regulates the mortgage brokering and lending activities of Mortgage Investment Corporations (MICs) under the Mortgage Brokers Act. The Registrar and the Mortgage Brokers Act do not regulate the capital raising and investment marketing activities of MICs which are subject to securities legislation and regulation.