Peer to Peer Lending in TCI
If you have been looking for a mortgage investment in the Turks and Caicos, you may come across a number of different options. Generally managed P2P loans are the most common, with a firm representing the lender, and the investor supplying all of the capital for the loan.
On the surface, these private lending opportunities look fairly similar in terms of property, exposure and return on investment. But when you look a little deeper, you start to see that not all the options on the island are the same.
P2P Explained
When you invest in a peer to peer or P2P private lending opportunity, the key point you need to take away is that you are the only investor in the loan. This means, that if the loan goes into default, you stop getting payments. If you are relying on these payments for your income, this is obviously a serious problem.
Secondly, assuming the firm doing the placement has done their due diligence and not recommended a loan that is too high risk, you should get your capital and interest back. However, the firms offering these loans get paid when they place the loan and by managing the loan. There is not downside to them if the loan goes into default or suffers a loss.
Why a Fund is Different
Commit Sooner
We don’t need to go from investor to investor looking for a match. High quality deals don’t last long.
We are Investors
Unlike firms offering P2P lending, we have capital invested in our fund as well.
Diversified Investment
Your investment is not tied to one property, you are a small investor in all of our properties.
Not Locked In
You can’t get out of a P2P loan mid term, loans in a fund are much more liquid.
Protect your Principal
Your returns are not significantly affected by a loan in default, unlike a fully funded P2P loan which results in no returns.
Cash and Growth
A fund can provide a quarterly cash return as well as an increase in your share value in the fund.
There is a Better Alternative to P2P Lending
Mortgage funds take the risk out of investing in private home loans. They diversify your investment dollars, allow you to redeem your investment, and provide you with a stable and predictable source of income.
P2P on the other hand, puts all the risk on the investor. Your income is only as predictable as your borrower is reliable. Lastly, there are no off ramps if your situation changes, you are locked in till the end of the term of the mortgage (and perhaps longer, if they cannot find another lender).
The choice is clear, mortgage funds are the safer, more secure way to invest your money in the Turks and Caicos!