Stock
Market Alternative
By
Gregg Winter, President
Winter & Company Commercial Real Estate Finance
From
the typical investor’s
point of view, how much confidence
is inspired by the stock
market’s performance
and consistency? In most
cases, I think the answer
would be…not very much.
Particularly for the investor
seeking to deploy tax-deferred
retirement funds, getting
a negative surprise or a
rude awakening is a most
unwelcome outcome.
What alternatives
exist that might
provide a “safer haven” for
investors that are capable of providing strong and predictable
cash flow? How can an individual investor diversify his or her
portfolio beyond the usual choices of stocks and bonds? One little
known answer would be: Private mortgage investments. For those
already in the know, this has long been an investment of choice;
double digit returns, steady cash flow and the security of a mortgage
lien with (if approached properly) multiple exit scenarios and
a very low likelihood of a loss.
What kind of net returns can an investor expect from a private
mortgage investment? Certainly somewhere north of 10% depending
upon whether the investor chooses to deploy his or her capital
in a) one specific mortgage (higher return, greater risk, with
no diversification), or b) in a Fund, which owns a pool of mortgages
supplying diversification and reducing risk (slightly lower return
with much lower risk and virtually no risk of sudden [unwanted]
prepayment).
(continued)
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