Brokers mining books for syndicate investors

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An increasing number of brokers are now mining databases and collecting significant finder’s fees not just for refis and switches, but for helping arrange mortgage syndicate deals -- a way of diversifying their revenue streams.

“When you look at the roots of the industry, mortgage brokering has always been about connecting people who need money with those who have it to invest,” Christopher Molder, an agent with Tridac Mortgages - The Mortgage Centre, told “Helping connect clients looking for an investment outside of RRSPs, and with mortgage investment opportunities, is just an extension of that mandate.”

That at least is the analysis of several industry players, themselves moving to incorporate that niche brokering work into their business plans as originations slow in some markets. And, like Molder, they argue arranging syndicate investment deals is a natural fit with their roles as mortgage brokers.

Under the terms of most of syndicate-broker arrangements, the referring mortgage agent collects anything from 2 per cent to 10 percent of the investment a client makes in the fund. Investors must usually cross a buy-in threshold of $20,000 to $30,000.

Brokers with extensive databases of A clients are generally best positioned to act as that go-between, with no real downside, said Molder. Still, there’s clearly an onus to perform the necessary due diligence on the syndicate, itself, and its investment track record.

The rise in activity comes as Canadians increasingly look to real estate investment as a way of bettering their returns on the more standard RRSP mutual fund investment.

While a growing number of investors are now prepared to buy property directly, many are looking to syndicates and MICs as a way of maintaining a more hands-off approach.

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