A lot of people invest in private mortgages in the US and Canada, it has a proven history of good returns on a safe and secured investment. In the Caribbean however, rates are higher and the risks in many ways are less, due to the low loan to value we recommend (50% max).
By being your own bank, you can dictate the terms of the mortgage, the qualifying criteria and property requirements. You decide which mortgages appeal to you and which ones don’t.
A typical loan that we facilitate for our clients would be a condo on Grace Bay (TCI), Seven Mile Beach (Cayman Islands) or Paradise Island (Bahamas). The client (US or Canadian citizen generally) would have 50% down payment, and the condo in most cases will already have a proven rental income. These highly marketable properties are in high rental demand due to their Caribbean location.
We do not recommend some locations or borrowers due to foreclosure issues if the worst case scenario were to happen. French colonies as an example (ie St Martin), have very difficult foreclosure laws so we don’t recommend them. We also generally stick to residential properties for private loans, nothing commercial.
Most borrowers we deal with are American or Canadian citizens, buying a vacation property. In most cases the property will be rented while not in use, providing enough income to cover the property costs. With 50% down payment in liquid assets, these borrowers are usually fairly strong and not at all in the same financial situation that clients who borrow private funds in North America would be in.
Any borrowers who want to borrow in a company name, will have to provide personal guarantees. These loans are generally equity based loans, with very little qualification requirements (unless you choose otherwise).
A typical mortgage we do for a client would be in the 8-10% range; the lower the rate, the easier it is to place. We can collect fees for you, or payments can be made directly to you. The mortgage can be open, or closed which would allow you to collect fees if the mortgage is paid out before the end of the term.
At the end of the day however, the client, terms and returns are up to you, as you are the bank! Talk to us today about investing in Caribbean mortgages.