Welcome to the 3rd episode of #AskAPrivateLender Podcast brought to you by Mortgage Automator. In this episode, we left the Greater Toronto Area and got a glimpse of the lending landscape out on the Canadian West Coast. We talked to Mark Pullin, the Co-Owner of Cedar Peaks Mortgage, lending in Alberta and B.C. Mark has been in the private lending industry for over 20 years and has seen a lot of ups and downs, which is quite relevant in today’s world.

We talked about Mark’s diverse career path, how the industry has changed over the years, the work ethic that contributed to his success, the deals that Cedar Peaks lends on, and much more!

Listen, watch, or read the interview below. And stay tuned for more episodes coming up!

Lawrence: For people who don’t know Mark, he’s been in the financial game for a really long time. I guess it’s around 40 years now from working with credit unions, banks, obviously private lending. Being in that space for such a long period of time, we’re really happy to have you because you have such a great wealth of knowledge that we think you could pass along to people listening today. 

Why don’t you talk a little bit about your path to getting to become a private lender, some of the business that you were involved in earlier on that brought you on that path to where you are today?

Mark: My first career-type job was in property management, managing apartments. Kind of like an assistant, a go-to guy collecting rent, getting to know real estate, tenants, and properties here in Calgary. I’ve been based in Calgary for the most part. From there, I moved over into banking. I was with Bank of Nova Scotia for a few years. Then, I joined the local credit union here in Calgary. I was with them for eight years, so I had about an 8-12-year banking career, all in lending, of course.

The credit union system in Calgary in the mid-80s during the high-interest rate period went through a major restructuring. They amalgamated about 12 credit unions into one, and that made Co-op Credit Union on one corner, Tuxedo Credit Union across the other corner, Bridgeland Credit Union on that corner.

They brought in a guy from Vancouver to straighten this mess out, and it took him a number of years, but that gave an opportunity for a lot of amalgamations and buyouts. At that point in time, a friend of mine was in the real estate business and he said, “Mark, you’re a natural for real estate. You should be a realtor.” I chose that option and left the banking world and went into selling real estate. Very successful career at that, again, here in Calgary, for another 10 or 12 years. 

Then, I met a lady that I really liked to spend time with, and real estate doesn’t allow you a lot of time to do that. You’re on call all of the time and no nights, no weekends. At that point in time, a buddy of mine was in the private lending world. He had a government job, raising money for venture capital. They laid him off during the ’80s, and he started in private lending. He was a good friend of mine, a good customer at the credit union, and he said, “Mark, you should come into private lending. You’re a natural. You got banking, you got real estate, you got lending. This is just a great fit.” That was exactly 20 years and three months ago.

Lawrence: So did you start a business with your friend? Or did you just do it yourself? How did that come about?

Mark: My friend had his own brokerage, and in Alberta, you have to operate under another brokerage for a minimum of two years before you’re able to open up your own brokerage and be a broker of record and so on. I was with him for just about two and a half years, and then Diane, my lovely wife, and I started Cedar Peaks Mortgage almost 20 years ago. We started with $140,000 of our own money, and today, we’re administering roughly $60 million of mortgages under admin.

Joseph: That’s phenomenal. That’s an amazing story.

Lawrence: I’m assuming, and correct me if I’m wrong, but the kinds of deals you were doing 20 years ago differ greatly from the kinds of deals that you’re doing today, right? The business has grown significantly over those 20 years and you’ve been there that whole way. What are the differences that you’ve seen over that time?

Mark: Well, the deals today are much, much larger than what they were 20 years ago. They’re more diversified into multi-family construction, industrial, and a much broader range of property types and locations. Back in the first five years of business, it was almost all residential, and smaller amounts, 30 to a hundred thousand, it was much different then than it is now, for sure.

Lawrence: Do you lend just in the Calgary area? Or are you spread out?

Mark: Technically, we lend all over Alberta and all over B.C., although some brokers will listen and go, “I tried you to get to some remote island up B.C. that you can only get to by boat and you said, ‘No.'” There are limitations, right?

We are licensed in Alberta and B.C., and if the deal makes sense, location, property, all of the stuff that you hear from every single A, B, and private lender, then we’ll look at it.

Lawrence: I don’t know real estate that well in Alberta, and I’m an Ontario guy. That’s kind of my neck of the woods. How close is the oil industry connected to real estate prices where you guys lend?

Mark: It’s very close. Alberta used to be a one-horse town. It was oil and gas. Over the years, it has diversified somewhat. A lot of IT has come in, medical supplies, insurance head offices. We have diversified, but at the end of the day, Alberta goes as oil and gas goes.

Joseph: If I recall correctly back when oil was going up in, I guess, ’08, or after… Well, once the price was at a hundred bucks a barrel or whatever it was, prices for you guys were going through the roof. 

I remember in some random town called Fort McMurray, houses were going for a lot of money, and people couldn’t understand why things were so expensive there. But it makes sense because all of the oil workers who made hundreds of thousands of dollars were living there, and so prices just went up. It was interesting to see. And so when oil went down, how badly was the market hit with that?

Mark: When oil really hit rock bottom, which was just let’s say 20 bucks a barrel, it depends on the price sector that you’re in, but anything over 2 million dropped significantly, and I mean 30%-40%. Two, three million, four-million-dollar houses, easily dropped by 30%-40%. Anything under a million dropped by 20%.

Lawrence: What do you do in that situation? What was the strategy there when you have all of these loans on the books and you’re seeing the price of real estate is… I don’t want to say in free fall, but it’s going down, and you don’t know how far it’s going to go. What was your strategy? I’m sure investors were calling. I’m sure they were asking questions.

Mark: Sure, and what people don’t realize is just because your market goes down, just because you might be underwater on your house, just because you used to be at 60% loan-to-value and now you might be at 90%, that doesn’t mean you’re going to stop paying. No matter what happened to the value of my house, no matter what, if I have the ability, I’m going to make my mortgage payment. Luckily for us, most people we dealt with had that type of integrity.

Lawrence: Yeah, and I would imagine most people feel that way about their primary residence, right?

Joseph: It’s not just a financial attachment. There’s an emotional attachment to it.

Mark: Absolutely, and the thing was, Alberta’s a boom and bust province, always has been. They know it’s going to come back. If you own a blue-chip stock, RBC, for example, and it was at 60 and today’s at 30, what are you going to do? You’re going to hold it and ride it and it’ll come back up. But luckily for us, most of our borrowers had the integrity and said, “Our equity position isn’t what it once was, but we are good people. Our employment hasn’t been affected. The market value of our home has, but our employment and income hasn’t. We’re just going to continue making those payments.” 

I wish I could tell you that was every single case, but it wasn’t. We had to go through, as every lender did, and I don’t care if you’re RBC or Cedar Peaks or a Schedule I or tier bank, you had foreclosures in 2008. You couldn’t help it.

Lawrence: Right. I have a friend whose family is in the building business. A very large builder, and back when the market wasn’t great in the ’90s, they would sometimes lend money out to help people buy their properties. They’d be the lender. 

They got a call from somebody who purchased a property from them, and they came into the office and said, “The interest rates are quite high. Is it possible that you can lower them for us?” That’s a good question to ask, and the question back was, “What’s the reasoning? When you took it out you knew what the payment was.” They said, “One of us lost our job, and just so you know, I eat dinner on Monday and my husband eats dinner on Tuesday, and we go back and forth to make sure that we can stay in our home. That’s what we do.”

To go back to the point you were making, people want to hold on to their residence regardless of circumstance. They have their kids there. It’s their one place where they can put their head down and they feel safe and they’re going to do whatever it is possible to stay there. 

For people who are thinking about investing in the private mortgage business, it’s a great business to be in, and if you’re an investor that’s in Mark’s area, as you can see, he is very knowledgeable. He is someone you should definitely reach out to to get a little bit more information because the way I look at the private mortgage business, the risk versus the reward is kind of out of whack in that space in terms of you’re getting such a high return for what I feel… I don’t want to say it’s minimal risk, but essentially it’s minimal risk.  

Joseph: People invest in stocks and can lose money. Mutual funds that the banks manage don’t always perform well. You put money in with Mark or any other private lender, you’re talking about returns between six, seven, eight, nine, potentially 10% for a real estate-backed security that you can touch, you can drive by, there is emotional attachment to the home. Everything that lines up when it comes to that type of investment is a great investment.

Mark: I appreciate you guys bringing that up and putting that out there, and in the event that you do have a foreclosure and a default, you always have the option of going, “You know what? Let’s just hold this property. Let’s rent it out.” You always got a piece of real estate that you don’t have to sell up.

Lawrence: Sometimes the rental rate may be better than the monthly payment.

Joseph: Obviously, not every deal is going to be perfect and you’re going to have your bumps in the road along the way. How much has your real estate license been a benefactor to you analyzing the deals? 

Mark: It’s been invaluable and I quit selling real estate actively 15-16 years ago. I have not actively taken a buyer in my vehicle or listed a property for that length of time. Yet, I continue to pay my annual real estate dues and fees, and there are three levels of them. There is local, provincial, and national. There’s also the continuing education requirements to maintain your license and the reason I do that is the valuable information I have and require in what I do to maintain that knowledge and expertise in the real estate field to recognize flaws or values or marketability of properties. I continue to maintain that real estate license for that very reason.

Lawrence: It’s good to be able to do your own research. The last thing that you want to do as a business owner, or anyone that’s lending out money or running a fund, is have to rely on other people to tell you what a property is worth. 

You want to be able to dig in deep and figure it out for yourself, and that way you can explain to investors, “Hey, you know, appraisal maybe came back at a million dollars or 500,000. I don’t feel it’s worth that much money. Whereas the broker thinks we’re giving them a 65% loan-to-value deal, I think we’re closer to 70-75%, and we’re going to price accordingly.

Now, one thing that’s hard to avoid is fraud. It can always happen. Have you ever been a victim of fraud with Cedar Peaks? 

Mark: Believe it or not, we have not.

Lawrence: Wow! That’s amazing!

Mark: One of my investors was involved in a scam. It did not involve Cedar Peaks whatsoever. It’s pretty easy to transfer the title here in Alberta. You just can forge a signature, go down to land titles, and transfer your property from Grandma Sally to Conman Fred.

This guy did this. He got hold of a transfer of land document, forged the owner’s signature. It was a clear title. Got the title changed into his name, borrowed money against it, cleared title, and so my investors, they were covered by the title insurance, but it was not a pleasant experience, so they were a victim of fraud. Luckily, we have never been a victim of outright fraud.

Joseph: A 100% clearance. I love it.

Lawrence: Do you guys deal with mortgage brokers? Do you do direct-to-consumer as well? Or is it mainly brokers that send you business?

Mark: It is mainly brokers. I would say 95%+.

Lawrence: What type of deals do you look for? If a broker’s listing right now and they’re like, “Hey, I’m in the area, I’ve never tried Cedar Peaks before.” Obviously, you don’t want people just sending in stuff you’re not interested in because it’s a waste of everyone’s time, but what’s your wheelhouse? Is there something specific that maybe you do that others don’t?

Mark: Well, first of all, I actually encourage brokers to send us any file that requires private financing. It takes us five minutes to say, “Hi, thank you, and I’m sorry this is why it’s not a fit.” Don’t be afraid to send Pender Island or something crazy because it gives us an opportunity to say hi, send you our guidelines, thank you for your business. Let us decide whether it’s of interest to us. Let us make that decision. Give us that opportunity.

What’s in our wheelhouse? As a private lender with a lot of flexibility, we are not major urban center-focused. Sure, we love major urban center files. That doesn’t mean we don’t want to see any. Some of our competitors are more major urban-focused than we are, so we have a lot more flexibility in regards to location, types of property, strength of borrowers, all of that type of stuff. 

To say what’s in our wheelhouse, it’s so wide. We lend on residential, obviously. We do a lot of construction files, a lot of industrial-type properties, multi-family properties, revenue-generating. Country residential acreages we’re not that afraid of.

It’s just so varied. If we have a borrower that we like, a property that we like, a location that we like, we’re going to try and get that deal.

Lawrence: I guess the message really is, if you have a private deal, flip it over to Cedar Peaks. Worst case scenario, in five minutes, they’ll say it’s not for them and tell you why, and I’m sure in that conversation, based on them telling you why it’s a no, you’ll have a better understanding the next time maybe what they’d say yes to.

Mark: You will always, always get a personal email from either myself or my Manager of Business Development and Senior Underwriter. Always a personal email outlining our appreciation for you thinking of us and the reasons why we turned your deal down.

Joseph: This explains why Mark’s been around for 20-plus years. His level of customer service is impeccable, super friendly, super honest, nice guy. Knows exactly what’s going on, and I’m sure the brokers appreciate the fact that he’s a straight shooter, tells it how it is, and says to them, “Listen, like the value’s not there and here’s why the value’s not there.” Or, “This income is not going to serve us. We’re heading into a disaster. I don’t want to take your client’s house.”

I commend you for that. That’s the best way to do it and that’s why you’ve been around. There’s a lot of guys that show up. They make a loud noise. They’re here for a few years and before you know it, “Hey, where is that guy? Oh, he’s gone.” It shows something when you’ve been around for 20 years.

Mark: Thank you. I appreciate that a lot.

Lawrence: What’s your view on credit today? You’ve been in the banking world for 40 years. 35 years ago, it was not as easy to get credit from a bank, but it seems like nowadays, everyone has credit cards. Mortgages are tougher today than they were 10 years ago, but I still think there’s a lot of ways that people can borrow money today, whether it be via a mortgage or unsecured. As someone who’s been in the financial world for such a long period of time, is it a good thing? Is it a bad thing? What’s your thought on it?

Mark: Well, it’s never a good thing to be a credit seeker. That’s a term from my banking days. And to have high credit utilization and max everything out. We look at that when we’re assessing loan applications, but we also look at circumstances. And let’s be clear that Cedar Peaks is one of many equity lenders out there. As long as we believe that there’s a reasonable expectation that this individual has the ability and desire to make his mortgage payments, we are not concerned with TDS or GDS. Never calculated a TDS or GDS since the day I left the bank. 

We just look at, is there a reasonable expectation based upon… People that are self-employed, they’re going to take out their 30, 40, or 50,000 a year to keep their personal tax low. You think we won’t overlook that? I will. I go, “Look, I know his company’s making his car payment for him and I know he’s writing off over half his expenses. We’re at 65% loan-to-value.”

Joseph: His TDS is 150% based on his net income.

Mark: Yeah. Credit, it comes into play. I’m more concerned with your R1s and your late payments than I am the amount of credit you might have.

Joseph: Lately, lenders have been reporting mortgages on to people’s bureaus. It’s one thing to see the guy missed a credit card payment…

Lawrence: … Or a cell phone bill…

Joseph: …Yeah, the guy’s in collections with Rogers because he got into a fight with someone and just tried to prove a point and they shoved him into collections. That score is not going to really say who that guy is, but if you see the guy’s missing his mortgage payments with the bank, that to me paints the clearest picture of all.

Mark: Totally. Once cellphone companies, Rogers, Bell, started reporting on credit bureaus, we’ve come to the conclusion that over half of the people don’t pay their cell phone bills. We just ignore it. Means nothing.

Tell me what you’re doing with your credit card and your line of credit, and your mortgage. I care more about that.

Lawrence: Running your business for 20 years, I’m sure you’ve been in touch with or been doing business with very wealthy people. You have $60 million that you’re managing currently. Just through your path of where you’ve worked, have you learned something that always stuck in the back of your mind from individuals that you’ve had communication with that have a lot of money? That’s why they have a lot of money because they do X or Y?

Mark: Yes, for sure. Over the years, it’s changed because some of these investors have been with me a long time. Back when, let’s say, oil was going from $50 to $100, they were coming into my office and dropping off $200,000 and $300,000 and it was just like no defaults and rising prices. Today, those same investors are 20 years older. 

Now, they’re 70, so instead of giving me $250,000 for a deal, they’re giving me $50,000 to $100,000, and they’re saying no, and they’re looking for lower loan-to-values so that they can retain their wealth. Them making decisions like that is what made them wealthy.

Lawrence: Capital preservation. They don’t want to screw it up. They have the money and they want to make sure it’s safe.

Mark: Yeah, so it has changed the dynamics of our… not necessarily our investors because a lot of them are the same. We’re getting new ones all of the time. The dynamics and characteristics of our investors have changed, for sure.

Lawrence: Is there a minimum amount of money to invest in Cedar Peaks? Or can anyone come in and invest money? How does that work?

Mark: I’d like to say $50K. We are dealing in a larger amount of mortgages, so if you don’t want to put in $50K, you should maybe not be investing in private mortgages.

Joseph: I couldn’t agree with you more. I think that’s the investors who are going to be calling you the most asking if everything’s okay when that first payment bounces.

Lawrence: Was financial responsibility and literacy taught to you growing up? Did your parents have a good understanding and pass that along to you? Or is it something that you just kind of learned over time and through trial and error you figured out?

Mark: I’m going to honestly say that I was self-taught, self-motivated. I got the right genes to be a responsible, hard-working, honest, individual. Left home at a fairly early age, although the home that I was brought up in, it was a wealthy home, but the most important thing in that home was money and not family. 

I bought a restaurant when I was 17 years old. I worked at a pizza restaurant from 15. I bought it outright when I was 17 years old, and then from that, went into property management and we’ve already gone over my career path. It’s all really been self-taught and self-motivated and self-made.

Lawrence: How big is the Cedar Peaks team now?

Mark: We have eight people. We got two underwriters, two management, two accounting, and two administration.

Lawrence: Very good, and for people who want to send deals, do they just hit the number on the website and it’ll be transferred to the right person? Or, who should they get in contact with?

Mark: Well, actually, right now on the investor side, there’s some security regulations from the Alberta Securities Commission, the Canadian Securities Authority, so we temporarily put down our website so we could revamp it to meet those requirements.

Lawrence: I saw that, actually. It said, “New web page coming soon,” right? Or something to that effect. But the most important thing I saw on the website is, “Business as usual. Send in your deals.”

Mark: Absolutely. Now, because of the access to credit bureaus and submission of files, that has all changed over the last two months.

Lawrence: It’s definitely a big change in a very short period of time. And it’s almost like you say, people aren’t prepared for it, but how could you be prepared for something that just changed on a dime?

Joseph: Mark, 20 years in the business. You’ve seen the ups, you’ve seen the downs. Would you say the last year and a half has been the most turbulent between these new rules, these integrations, the governance of everything? It’s been pretty hectic, at least I know for us, but must be super hectic for you guys, too, adjusting, adapting to all of these new things.

Mark: Yeah. We’ve had three major events that have happened to us. In 2008, we had… What do you want to call it? The Financial Crisis.

Joseph: Credit crisis, all of the banks like HSBC, Citi, they stopped doing business…

Mark: Wells Fargo moved out of Canada. It was a disaster. I would say that ranks right up there with the worst. In 2010, I’m not sure about Ontario, but in Alberta, the Alberta Securities Commission took over the regulation of syndicated mortgages. The definition of a syndicated mortgage is when two or more people participate in one mortgage loan, and most of our loans do have two or more investors. That fell under the regulation of the Securities Commission. That was our second-most upheaval. That was a tough one to get through. Still is, actually, 10 years later.

As you say, the last year and a half, with regulations and rule changes and, obviously, COVID, we haven’t mentioned that C-word yet, but I’m surprised we went 40 minutes and didn’t mention the COVID word.

Lawrence: I try to forget about it. I just try to keep it out of my head, but it’s here, right? 

Mark: I would say those are the three most difficult periods in 20 years.

Lawrence: Any files that you funded over the last little while that maybe you want to talk about? Maybe challenging files you were able to get done? Or just files that you liked?

Mark: This will give you guys and the brokers a little bit of an idea as to what Cedar Peaks does.

$400,000, first mortgage, 65% loan-to-value, purpose was to pay out a BTB and consolidation. What made this property a Cedar Peaks file was that it was located on Island Highway in Royston, B.C. Not many lenders would do that.

Lawrence: For the record, I’ve never heard of Royston, B.C., so you’re saying it’s a small rural area?

Mark: Yeah.

$300,000, first mortgage, 35% loan-to-value on an industrial piece of property where the owner is going to construct and implement a farm store retail location, located in the County of St. Paul, Alberta.

Smaller mortgage, $88,000, 50% loan-to-value. Purchased an old rental property that’s habitable but just barely. He’s going to demolish that and build a multi-family unit on that property.

Lawrence: People say they do a lot of stuff…

Joseph: Mark actually does it.

Mark: $575,000, 60% loan-to-value to purchase 15 multi-unit townhouses in Westlock, Alberta.

$825,000 for a dentist to construct a four-plex building in Calgary. Construction project right from ground-up, four-plex.

$600,000, 60% loan-to-value, Nelson, B.C. And he’s going to construct a duplex on this property.

Lawrence: Joe is now married. Before Joe’s wife was his wife, obviously, she was his girlfriend, and Joe said, “Sometimes I invest in these mortgage deals. Why don’t you try it out?” She says, “I have $50,000 in savings. Is that going to do it?” He goes, “I have a great deal for you. It’s in Alberta, and I think it’s going to be a good deal.” Joe, you could take it from here.

Joseph: This was about five years ago. I think prices were still fine. She put the money into a deal in Fort McMurray. I’m not sure if you remember, but five years ago, there were fires that happened in Fort McMurray.

Mark: How could I forget that?

Joseph: I’m watching the news and the camera just goes by a sign. It’s like a burnt sign that says “Arena” or something. I remember when I was looking at the appraisal, it mentioned that the house was next to an arena. The first thing that comes to mind is I looked up the name of the arena that the appraisal had, and they showed that the entire neighborhood is burned down and there’s nothing left of it. I look at my wife and I tell her, “I’m not sure how to tell you this, but the house that you lent on was burned down in a fire.”

I said I’m 99% sure, because the epicenter, it said the arena was 0.3 kilometers from the house. I said to her, “Call the insurance company right now and tell them to write you a cheque.” By the way, they didn’t want to write us a check.

Lawrence: They ended up covering it.

Joseph: She calls because she’s on title, it’s a whole headache. We were behind Citibank. The guy who we gave the money to ended up going blind because of the fires, unfortunately. The daughter was dealing with it. Can’t get a hold of the guy. We called the insurance company. They’re like, “We have to write a cheque to him and he has to write you a check.” That’s how they were dealing with it. I told her, “I think I have to buy you a flight to Edmonton and you’ve got to drive to Fort McMurray to meet this guy and figure this out.” She’s looking at me and she’s like, “I’m absolutely going to kill you right now.”

Two months it took. The insurance company finally wrote her a cheque, and I’m just curious, did you have to deal with any of those things?

Mark: Yeah. We had a couple of houses under construction for Mac and a builder that, through no fault of his own, we ended up taking a bit of a haircut, but it’s the nature of the business.

Lawrence: Part of the business. From what I hear, it’s always people who put their money in a first deal, they’re nervous. They want to know what’s going on. Maybe they’re calling you, “Mark, is my money okay?” Once they’ve been in it for a while and they start to understand, they get addicted to it. They love it, right? They want to keep going.

Mark: Well, that’s how we went from zero to $60 million. What you just described was my exact feeling when I put my $140,000 into an apartment complex development down in South Calgary, my first deal. 

Every investor I have, they give you $50,000 and they wait till they get the post-dated cheques. They wait until they get the lawyer documents and they wait until they get the certificate of title. Then, they wait for a payment and another payment. Then, they go, “Okay, I’ll give you another 50.”

Then, they’re out golfing with their buddy and they go, “You know, I started dealing with Cedar Peaks Mortgage and they got this pretty good thing going.” Then, that guy phones and he gives you 50. And it just snowballs from there and you hit $60 million 20 years later.

Lawrence: You know, it’s a good lesson for people to listen to. Just because someone comes into your office and says, “I have $50,000 or $100,000 to invest,” doesn’t mean that’s the end of the line for them, right? They’re taking a flight or they’re trying it out, they’re getting their feet wet.

For people who are listening or maybe in the same type of business even, or maybe they’re a mortgage broker and they don’t want to deal with this small property, it’s going to be a $30,000 mortgage from the bank, you don’t know what’s around the corner. You don’t know what else they have, who else they know, how many other people they’re going to connect you to. It’s always important to treat everyone the same way.

Mark: I will touch on that a little bit. After the 2008 crisis, the Securities Commission, as I mentioned, said, “Wow, that was a disaster. Wonder if we should step in here and have a look at this industry?” A lot of it was mortgage-related. 

The rules today are such that if you walk in… Let’s take Joe, your wife, who walks into my office, says, “Here’s my last $50,000, I’m going to take a run on this mortgage.” I actually could not accept her money. The Securities Commission has said, “Investors, if you want to invest in mortgages, you must be accredited and you must not only be accredited, you must be suitable.” 

Suitability is stepped up by the securities standards a lot. Accredited is basically net financial assets of a million dollars or income of $200,000 or more. But then, just because you have that, that doesn’t mean you’re suitable. You could be 83 years old. It could be the fact that that’s all you have and you had no other assets. It could be that you have to rely on that interest income to put food on your table, even though you’re accredited by definition.

Not only do you have to be accredited, but as a dealing representative, we have to ensure that you’re also suitable to the investment.

Lawrence: As someone who always has that best interest at hand for your investors, do those rules and regulations bother you? Does it bother that maybe someone walks in the door that you think, “They maybe don’t check all of these boxes, but I think that they’re right for the fund?” Does that happen to you? And does it bother you that sometimes that happens for some individuals?

Mark: Yes, it does happen. I’ll give you an example. I have a doctor. He’s a family physician. Not all that old. I’m pretty sure he’s in his 50s, so not all that old. Makes great income. He only invests in mortgages with Cedar Peaks Mortgage, that’s it. So when we talk about suitability in the Securities Commission, they talk about concentration. What percentage of this guy’s available money is invested in exempt market products, syndicated mortgages? They like to see 10%, which is ridiculous.

We’ve got some flexibility there. There’s no written regulation under any securities act that said, “You cannot have any more than this,” but if you have more than 10 or 15%, they are going to question and want to see your suitability reassessed.

This guy says, “The Securities Commission is not going to tell me what I can and cannot invest in. They’re not. They can’t. None of their business. If I want to invest over concentration, I will. Give me something to sign that says you’ve discussed concentration. You don’t feel this is a suitable investment and I’ll sign a waiver.” He could be at 50, 60, 70% concentration if he wants to be.

If you have a guy with $2 million and a clear title to his house and a recreational property and some other assets and he’s got 2 million and he’s limited to 200,000 with us?

Lawrence: What’s he going to do with the other 1.8? Right?

Joseph: Interesting question. Mark has a proven track record to make the guy 8-10%, whatever it is. Then, the guy gets pushed away by… Let’s not even say Mark, by somebody else who’s following that protocol, and then the doctor goes, “I guess I’ll put it in the stock market,” and he loses 10%. Will he feel better? Will the Alberta Security Commission feel better knowing that the guy lost money instead of just parking with Mark, making his quiet 8% all day long?

Mark: That’s his thinking exactly.

Lawrence: Cedar Peaks, if you could describe the company in one word, what would that one word be?

Mark: Flexible. Flexibility is what we’re all about. It’s one word, flexible.

Lawrence: That’s a good word to describe a private lender because if I was a broker, that’s probably what I’d be looking for. Someone who isn’t just going to look at a black and white box and say, “Doesn’t fit”. You’re not afraid to sink your teeth into a deal and figure it out and find a way to make it work.

Mark, we really wanted to thank you for stopping in today. I think it was really informative. Is there anything to close out that maybe you want to tell people that are listening?

Mark: I’m going to give you something a little bit corny, but I hope it brings a little smile to your faces. When you get a file on your desk, you owe it to your client to go to A, your A lenders. If that doesn’t work, you owe it to your client to go to a B lender. If that doesn’t work, you owe it to your client to go to C… Cedar Peaks Mortgage.

Lawrence: You heard it here first. You’ve got your A lenders, you’ve got your B lenders, you’ve got your Cedar Peaks Mortgage. 

Mark: Okay, guys. Thanks so much. I appreciate the opportunity, and for all of those folks listening now or down the road, hello and we appreciate your business. Thank you.