Who’s All Involved?
What are the ‘roles’ of the main three parties involved?
There are several players in a transaction like this, each with various duties and responsibilities to play. They are basically as follows (but not limited to):
Real Estate Investor / Entrepreneur and team:
They find the deals and they construct the deals to buy with cash and mortgage funding (first and second mortgages). As the engineer of the deal, they must make sure that the other parties have ALL the information on every aspect of the deal that would be required for them to make sound, informed, and intelligent decisions. Typically, they set up the details of the mortgage with respect to term, interest rate, and payment schedules, for the RRSP planholder investor (that’s you) to consider, and then mutually agree to.
RRSP/Planholder Investor and advisors (that’s YOU):
Typically, this is a person disgruntled with the status quo mutual funds and stock-based funds for RRSP investing, and their lack of performance. They want to take control of their RRSP portfolio, and in order to do that well, they will educate themselves and take on the actions and responsibilities as the CEO of their retirement future. They will have some professional advisors in their corner for advice and consultation in handling their affairs.
Trustee:
The trustee is a financial institution (like Olympia Trust) that is set up as a stakeholder for the planholders of RRSP monies and their account. They accept the payments, monitor the regularity of them, and report to the planholder. They also co-ordinate, with the input and instruction of the planholder, the setting up of the account including any movement of funds being held with other institutions or brokerage houses.
Arm’s Length Mortgages are considered to be a sophisticated investor strategy.
If… you are a sophisticated investor…
Or, if you would like to become a sophisticated investor…
Or, if you are not satisfied with the returns you are getting on your RRSP, RRIF or LIRA account…
Then, I suggest you consider using the funds available in any one of the above accounts for one or more Arm’s Length Mortgage(s).