Mortgage Investment Corporations: Passive Income With Real Estate-Backed Confidence
Mortgage Investment Corporations (MICs) have become a go-to option for Canadians who want exposure to real estate without buying a rental property or managing tenants. They’re designed to generate steady monthly income, backed by secured mortgages, and they’ve gained momentum as bond yields fluctuate and traditional savings vehicles struggle to keep pace with inflation.
In this article, we break down how MICs work, what they pay, the risks to watch for, and how to vet them before putting your money to work.
What a MIC Actually Does
A MIC pools investor capital and lends it out as private mortgages. These loans often serve borrowers who fall outside traditional lending guidelines, so they typically command higher interest rates.
The income generated from those mortgages, including interest and fees, is passed back to investors, usually monthly or quarterly. Because MICs must distribute all of their net income each year, they are structured to pay out consistently.
Many focus on:
First or second residential mortgages
Short-term bridge financing
Construction and development loans
Niche lending such as land financing or special situations
Why Investors Look at MICs
MICs aim to offer a mix of yield, diversification, and real-estate-backed security. Top reasons investors consider them:
Monthly income. Many MICs generate 6 to 9 percent annual returns, paid regularly. Real estate exposure without ownership. You get exposure to mortgage returns without buying property. Secured lending. Loans are backed by real estate, which gives investors collateral protection if a borrower defaults. Portfolio diversification. MICs can balance equity-heavy portfolios or complement GICs and bonds with higher yield.
The Risk Reality
MICs are not savings accounts, and they are not guaranteed. Important risks include:
Default risk. Borrowers who fall behind can impact cash flow and overall performance. Underwriting quality matters. Market shifts. Changes in real estate values can affect loan recovery amounts. Liquidity limits. Some MICs only allow redemptions on a scheduled basis. Manager skill. Results vary widely based on the lending team’s experience and discipline. Concentration. A MIC that focuses too heavily on one region or loan type carries added risk.
What to Vet Before You Invest
Due diligence is everything. Before choosing a MIC, review the following:
Loan Portfolio Breakdown
First versus second mortgages
Average loan-to-value
Residential versus commercial mix
Loan size distribution
Geographic diversification
Track Record
Historical returns and consistency
Default rates and recovery outcomes
Performance during slower market periods
Management and Underwriting
Experience of the lending team
Approval process and risk controls
Appraisal standards
Exit strategies for borrowers
Liquidity Terms
How often you can redeem
Any penalties or holding periods
Fees
Management fees
Performance fees
Additional costs that reduce investor yield
Who MICs Are Best Suited For
A MIC can be a fit for investors who want stable income and real estate exposure without dealing with tenants or buying more property. They are often used by retirees, hands-off investors, or those building a fixed-income sleeve with higher yield potential.
They are less suitable for investors who need quick liquidity or want guaranteed returns.
Final Thoughts
Mortgage Investment Corporations offer an appealing combination of passive income and real-estate-backed confidence, but choosing the right one requires more than looking at the headline yield. Portfolio construction, management quality, underwriting discipline, and liquidity rules matter more than the advertised return.
With proper vetting, a strong MIC can play a valuable role in a diversified wealth strategy.
Disclaimer: The information in this article is provided for general educational purposes only and does not constitute financial, legal, or tax advice. Readers should consult qualified professionals before making decisions based on this content. View our full Disclaimers & Privacy Policy →
Mortgage Investment Corporations (MICs) have become a go-to option for Canadians who want exposure to real estate without buying a rental property or managing tenants. They’re designed to generate steady monthly income, backed by secured mortgages, and they’ve gained momentum as bond yields fluctuate and traditional savings vehicles struggle to keep pace with inflation.
In this article, we break down how MICs work, what they pay, the risks to watch for, and how to vet them before putting your money to work.
What a MIC Actually Does
A MIC pools investor capital and lends it out as private mortgages. These loans often serve borrowers who fall outside traditional lending guidelines, so they typically command higher interest rates.
The income generated from those mortgages, including interest and fees, is passed back to investors, usually monthly or quarterly. Because MICs must distribute all of their net income each year, they are structured to pay out consistently.
Many focus on:
Why Investors Look at MICs
MICs aim to offer a mix of yield, diversification, and real-estate-backed security. Top reasons investors consider them:
Monthly income. Many MICs generate 6 to 9 percent annual returns, paid regularly.
Real estate exposure without ownership. You get exposure to mortgage returns without buying property.
Secured lending. Loans are backed by real estate, which gives investors collateral protection if a borrower defaults.
Portfolio diversification. MICs can balance equity-heavy portfolios or complement GICs and bonds with higher yield.
The Risk Reality
MICs are not savings accounts, and they are not guaranteed. Important risks include:
Default risk. Borrowers who fall behind can impact cash flow and overall performance. Underwriting quality matters.
Market shifts. Changes in real estate values can affect loan recovery amounts.
Liquidity limits. Some MICs only allow redemptions on a scheduled basis.
Manager skill. Results vary widely based on the lending team’s experience and discipline.
Concentration. A MIC that focuses too heavily on one region or loan type carries added risk.
What to Vet Before You Invest
Due diligence is everything. Before choosing a MIC, review the following:
Loan Portfolio Breakdown
Track Record
Management and Underwriting
Liquidity Terms
Fees
Who MICs Are Best Suited For
A MIC can be a fit for investors who want stable income and real estate exposure without dealing with tenants or buying more property. They are often used by retirees, hands-off investors, or those building a fixed-income sleeve with higher yield potential.
They are less suitable for investors who need quick liquidity or want guaranteed returns.
Final Thoughts
Mortgage Investment Corporations offer an appealing combination of passive income and real-estate-backed confidence, but choosing the right one requires more than looking at the headline yield. Portfolio construction, management quality, underwriting discipline, and liquidity rules matter more than the advertised return.
With proper vetting, a strong MIC can play a valuable role in a diversified wealth strategy.
Disclaimer: The information in this article is provided for general educational purposes only and does not constitute financial, legal, or tax advice. Readers should consult qualified professionals before making decisions based on this content. View our full Disclaimers & Privacy Policy →
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