Right Size Mortgage Investment for You

What Size Mortgage Investment is Right for You?
You may be wondering what size or amount of mortgage you should be looking for to begin your next investment. Always consider lending on multiple mortgages at the same time. Diversify your portfolio between several different loans to reduce risk and balance your return.

Statistically speaking, not all of your borrowers will be late at any one time. If one of your borrowers even defaults, by diversifying, that one loan will represent only a fraction of your monthly mortgage portfolio income.

One method is to take the portion of your nest egg allocated for mortgage investments and divide it by at least 5 or 10, depending on the total amount.

For example, if you have $200,000 of your portfolio allocated to mortgages, you should be targeting mortgage investments between $20,000 and $40,000 or less. Another good rule of thumb for smaller amounts is to restrict a single mortgage to no more than 25% of your portfolio. If you have $50,000 that you would like to put into mortgages, split it up into three or four mortgages to balance out your risk.

Of course, your risk is already extremely low if each mortgage you purchase has a low loan-to-value ratio, but spreading your funds over several different mortgages makes your risk drop even more!

For further information please contact: Jorge Garcia-Pulido, President/CEO 305-796-4799



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