MIC vs. Private Lending

MICs are typically investment corporations that pool money from individual investors to provide mortgage loans to borrowers. They are regulated entities and often have a portfolio of mortgages secured by real estate. Investors in a MIC can earn returns through interest payments from the mortgage borrowers. MICs are generally managed by professionals who assess the creditworthiness of borrowers and manage the investment portfolio on behalf of the investors.

Private lending, on the other hand, involves individuals or organizations directly lending money to borrowers without the intermediation of a financial institution. Private lenders may include individuals, family offices, or specialized lending companies. Private lending can cover a wide range of loan types, such as personal loans, business loans, real estate loans, or asset-based loans. The terms and conditions of private lending are negotiated directly between the lender and the borrower, and the interest rates and repayment terms can vary depending on the agreement.

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MIC vs. Private Lending

In Private lending the loan is against a single property whereas in MIC your money is lent over a bunch of different properties. This is because your money goes to a pool and all mortgages are issued from that pool so one investor’s money is spread out in different mortgages.

Better Returns

In MIC your money is always working for you. A Private lender lends for a period of 1 year and then may have to wait 2-4 months to find a suitable mortgage to lend their money on. Also smaller investors may have a hard time to find mortgages of smaller size. Whereas a MIC has resources to lend on different size mortgages and often has a Line of Credit from a bank which allows the MIC to stay invested in full all the time. So even after paying a fee for administration, a Private Lender can get better returns over the long term with lesser risk.

Professional Management

Investors in a MIC do not need to spend time on administrative tasks such as dealing with lawyers, collecting back from borrowers. A Private Lender also needs to possess knowledge of properties etc which can be a tedious job.