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Three Reasons Conservative Investors Are Turning to Private Real Estate Lending

In today’s unpredictable markets, conservative investors are rethinking where and how they deploy their capital. With bond yields....

Apoorva Bordoloi

26 Jun 2025 — 2 min read

Photo by Nonsap Visuals / Unsplash

A Shift in Investor Psychology

In today’s unpredictable markets, conservative investors are rethinking where and how they deploy their capital. With bond yields fluctuating and equity markets behaving erratically, private real estate lending has emerged as a reliable alternative, especially for investors prioritizing capital preservation and income.

Often misunderstood as a high-risk endeavor, well-structured private lending can offer a unique blend of stability, security, and return. Through Mortgage Investment Corporations (MICs), Canadians can participate in this asset class without directly managing properties or
lending individually.

Reason 1: Income Stability in a Volatile Market

Traditional fixed-income products, like GICs and government bonds, have not kept pace with inflation in recent years. Meanwhile, dividend stocks and bond ETFs remain vulnerable to interest rate shifts and market volatility.

Private real estate lending, when done prudently through diversified mortgage portfolios, offers consistent, contractually mandated interest payments. MICs typically aim to deliver 7%–10% annual yields, which are distributed quarterly and backed by real property. These returns are relatively stable regardless of stock market behavior.

Reason 2: Asset-Backed Security and Capital Preservation

Unlike unsecured corporate bonds or equity investments, private mortgages are backed by tangible real estate assets. In the event of borrower default, the lender holds a registered lien and legal recourse to recover capital.

At Morex, we focus on owner-occupied residential mortgages with conservative loan-to-value (LTV) ratios, typically averaging around 67%. This approach prioritizes principal protection while still allowing for meaningful returns.

Compared to speculative real estate development or REITs tied to commercial trends, our strategy is more conservative and aligned with income-seeking investors.

Reason 3: Diversification Without Market Correlation

Diversification is more than owning a mix of stocks and bonds—it’s about reducing your exposure to systemic risk. Private lending behaves differently from public assets, making it a powerful addition to portfolios aiming for resilience.

MICs are not traded on public exchanges. As such, they are insulated from daily price swings and investor panic. This makes them especially attractive for retirees, family offices, and conservative investors looking to reduce portfolio volatility without sacrificing income.

The Bigger Picture: Demand Meets Discipline

Canada’s housing market, especially in regions like Ontario’s Golden Horseshoe, continues to experience structural supply shortages. As bank lending tightens under regulatory pressure, private lenders step in to fill financing gaps with professionally managed, short-term mortgages.

The result: borrowers gain flexibility, while investors gain access to secured, yield-bearing opportunities that were previously reserved for institutions.

Closing Thoughts

Private real estate lending through MICs is gaining attention not because it’s trendy, but because it works. For conservative investors, it provides the three things that matter most: stable income, capital protection, and low market correlation.

As with any investment, due diligence, structure, and expertise are key. But in the right hands, private lending can serve as the cornerstone of a modern, risk-aware investment strategy.

Disclaimer
This article is for informational and educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy securities, including shares of the Morex MIC Fund. Any investment decision should be made only after reviewing the offering memorandum and consulting with a licensed financial advisor. The Morex MIC Fund is available only to eligible oraccredited investors under applicable Canadian securities laws.

Mortgage investing involves risks, including the potential loss of capital, limited liquidity, and may not be suitable for all investors. Investments in a MIC are not guaranteed or insured.

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