Private Lending Platform

Private Lending Origination Platform

Another service we offer our clients at Carib Capital is a private lending  platform (facilitating loans between borrowers and investors). This is where an investor lends money directly to a borrower for the purchase of real estate. It is ideal for those who would prefer to have more control over their funds. They decide who they are lent to, on what type of property and the amount of exposure. This requires more work on behalf of the investor and a bit more risk as opposed to a fund. For those who want to be a little more hands on however, private lending in the Caribbean can be a rewarding experience.

*Please note, we do not sell any investments, hold any funds, or advise people on loans. We simply facilitate the transaction between borrowers and those looking to lend their capital. 

For those who invest in mortgages in North American, you have a pretty good idea of what is involved and the risks associated with being a mortgage lender. There are some differences however if you choose to do it in the Caribbean. The local banks unwillingness to lend to quality clients, on quality real estate create a unique investment opportunity.

The Benefits of Private Mortgage Lending in the Caribbean:

  • The quality of client is much better. You are not dealing with clients in distress, but rather clients buying a vacation property.
  • Most properties will be vacation rentals producing rental income to cover the payments should the borrower fall into tough times.
  • The loan to values are much lower than in North America. Generally 50% would be the max versus 75-80% for similar loans in the US and Canada.
  • The properties are highly marketable in some of the top vacation spots in the Caribbean.

Private Lending Versus Investing in a Fund

Although there are many similarities between these 2 types of mortgage investments , there are some key differences. First off, direct private lending means it’s all your money invested in the mortgage; you take all the risk. Granted we generally recommend only going to 50% loan to value, it’s still much more risk than you would have in a fund. In a fund, your investment is mixed with hundreds of other investors, so your exposure on any one deal is minimal.

On the flip side, you have the ability to pick and choose where you invest with a private loan. You decide the rate, terms, property and client; something you don’t get to do in a fund. If you are handling all aspects of a private loan, you will usually make a higher return on your investment.

Another major difference is the required investment. Generally with direct private lending you will be looking at a minimum investment of $100,000 USD (we generally do not facilitate mortgages smaller than this). With a mortgage fund, usually $25,000 is the minimum buy in. For many investors, this can be the deciding factor.

To summarize the comparison, one is a more hands on approach to lending, while the other is an investment vehicle which takes away much of the time and risk.

Talk to us today if you are interested in becoming your own lender in the Caribbean, private loans are a great, low risk option to increasing and diversifying your offshore portfolio.