Making a loan through Omicron is a direct mortgage investment. The alternative is to go through a mortgage fund manager. However there are serious drawbacks with mortgage funds. If it is a pooled fund there is a danger the fund will become illiquid and be frozen. It will then be many years before you are able to recover a fraction of your capital. In this sense you are not so much investing in real estate as you are betting on the management of the fund. By contrast if you invest directly into mortgages the management risk is eliminated.
This is because your name goes on title*, you decide what properties to invest in, and you decide how to deal with defaults. And no matter how bad things get no-one can call in a liquidator to feast on your hard-earned capital. With a registered first mortgage your investment is as secure as if you were the registered owner of the same piece of real estate without any debt.
*Unless you decide to use a trustee.
Capital guaranteed by land that has not moved in billions of years
A direct mortgage investment means that no matter what happens you will always have, even in the worst case scenario, the land you loaned against. You can foreclose and become the owner, you can rent, sell or develop. If there is a great recession, a worldwide pandemic, or hyper-inflation, no matter what the challenge the intrinsic value of your investment will remain safe. During the economic crisis the security property can usually be rented out and so continue to earn you income. When the downturn is over your capital will be there waiting for you. Indeed, it may have significantly increased thanks to the wonders of compound interest and rising property prices. You will not be cheated by liquidators and lawyers feasting on the corpse of yet another failed mortgage fund.
The other major upside of direct mortgage investing is that the returns you receive are usually materially higher than those a mortgage fund will pay. This is because there are no management fees and you are able to charge higher rates for odd-shaped loans which, in your opinion, are nonetheless safe investments.
The power of the network effect
These benefits have always been known to high-net-worth investors with family offices at their disposal. The problem for the small investor has always been that it requires immense work to find suitable deals. Prior to Omicron it was necessary for a private mortgage lender to call dozens of brokers. The brokers would usually be lukewarm because when they last called that lender with a deal all their money was all out on loan. It was a frustrating and tedious process for all involved.
Omicron enables small investors to invest with ease by leveraging off the network effect. You simply tell Omicron what money you are looking to place and the platform then brings it to the attention of brokers who have suitable deals.
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Omicron uses a star-based rating system and displays metrics for every loan written by every lender and broker through the platform. This ensures that our brokers and lenders can be sure their counterparty has the track record of professionalism necessary for success.
Our lenders advertise their funds availability through the platform, this results in deals coming to them instead of needing to call around brokers. Additionally, our code of conduct and metrics on broker performance allow lenders to confidently deal with a wider range of brokers, and therefore a bigger potential pool of deals.
Our brokers use Omicron to find the best lender available for their particulare deal. The metrics on each lender which we display allow our brokers to have confidence in dealing with a wider range of boutique lenders.
Omicron utilises a star-based rating system and display metrics from every loan written through the platform. This ensures that brokers and lenders can be sure the counterparty they are dealing with has the track record of professionalism necessary for success.
Omicron is a network of private mortgage lenders and the brokers which takes the guesswork out of placing a loan privately.