Considering the Argument for Adding Individual Mortgages to Your Client’ s Investment Portfolio
CInvesting in mortgages should not be looked at with trepidation. As with other cash flow investments such as corporate bonds, government notes, or money market funds, mortgage investments can be looked at in the same vein. Mortgage investments have an attractive riskreturn ratio in comparison to other incomeproducing investments. If you choose your investment intelligently, individual shortterm mortgages( which I define as first deeds of trust on real estate with 65 % loantovalue( LTV) ratios, maturing in two years or less) are considered more risky than money market accounts or US Treasury bills, but they offer yields at the level of high yield corporate bonds, or even higher with potentially lesser risk.
Chart 1 shows the general risk * of shortterm mortgages as compared to other income producing investments.
RISK VS REWARD FOR MORTGAGE INVESTMENTS Should You Add Mortgage Investments to Your Portfolio?