california-ca , Call us today to get your FREE e-Book-How to invest in
Trust Deeds The borrowers are savvy real estate investors who are
planning to. make a very large return and/or strike a very favorable
deal, and are. willing to pay for a simple and quick source of
capital. These. borrowers can often afford to pay lenders low double
digit rates of. return, even though the loan is well-secured, because
the borrowers. are typically aiming to make an annualized return of
20 % -50 % on their. investment. Paying the lender a much lower
return (relative to their. projected returns) allows them to enhance
the returns they earn on. their cash investment. Trust Deed Best
Trust deed investing is simply investing in loans secured by real
estate. Most trust deed investments are relatively short term loans
(maturity under five years, with many loans two years or less) made
to professional real estate investors. In the current economic
climate professional real estate investors are buying properties at
foreclosure sales for bargain basement prices, fixing-up these
properties, and reselling them for a profit. Banks are reluctant to
Lend to this market not because the loans are particularly risky
because banks have a great deal of bad real estate loans on their
balance sheets as a consequence of the loose lending practices of
recent years. Presently, banks are unwilling to make real estate
loans unless they fit a very strict set of criteria. They often do
Because the, not want to lend to opportunistic real estate investors
property which is security for the loan is not "move-in ready" at the
time of loan funding it usually needs some work. For this reason,.
real estate investors have limited financing options available to.
them, and lenders to this market are able to command relatively high.
interest rates. Real Estate Investing in Trust Deeds in California
The margin of safety is the difference between the loan amount,.
and the value of the underlying property. The core concept of trust.
deed investing is that if the borrower does not perform, the lender.
can foreclose on the property and sell it to recoup the investment,.
plus any past due interest. if the loan is sufficiently conservative.
i.e. the property value is high relative to the loan amount, then
the. If the borrower defaults on the, investment should not lose
money even. loan. A well structured trust deed investment might have
a. loan-to-value of 65 %. Trust Deed Best Investments call
Trust deed investments are not liquid. In other words, you can
not. decide you want your money back one day and quickly convert
your. investment into cash, as you could with a municipal bond or
shares in. a blue chip company. You need to be willing to stick with
your. investment until the borrower pays off the loan, or, in case
of. default, until you have foreclosed and sold the underlying
property. With Trust Deed investing there is little chance for
capital. appreciation. This all requires a. particular knowledge set
that the investor must be acquire. Trust. deed investing is not
without risk. A small flaw in the documentation. or due diligence of
a trust deed investment could mean that an. otherwise very safe
investment becomes very risky. . If the borrower or, litigation or
title problems could cause problems. some other party can make a
credible claim that your trust deed. instruments are not valid, or
that they have some interest in the. underlying property that is
equally or more valid, the trust deed. investor might need to battle
to protect the investment. Trust deed. investing is not for the faint
of heart. Amateurs need to take. particular care, and seek guidance
from trusted experienced. investors. That being said, there are tens
of millions of valid trust. deeds owned by banks as well as hundreds
of thousands owned by. private investors. Creating a valid trust deed
and accompanying note. is not rocket science. Real Estate Investing
in Trust Deeds in California CA.
It is precisely the banks' reluctance to participate in this.
market that has created the attractive investment opportunity in.
short term real estate loans. People. who flip houses plan to pay
back their loans in under a year. Given. how thoroughly a bank
underwrites a borrower, it is not profitable. for them to spend time
and resources on a loan that will only repay. in six months. They
much prefer to make loans that will be. outstanding for 30 years.
Conversely, due to the intense competition. to buy houses, people who
flip homes have very short loan funding. deadlines, often one or two
weeks. Again due to internal bureaucracy. As the regulatory
environment, banks are unable to meet these. short deadlines. Real
Estate Investing in Trust Deeds in California CA.Call 951-221-3929.