Setabay Private Hard Money Lender: investing in deeds of trust
Showing posts with label investing in deeds of trust. Show all posts
Showing posts with label investing in deeds of trust. Show all posts

Wednesday, November 23, 2016

What makes trust deed investing appealing and scary to most people?

There are few investments that give you the feeling of uncertainty along with excitement. Trust deed investing will give you that throughout the entire process. Yes, these types of investments can be very risky, but the payoff would be very profitable if all parties were able to follow through. The article will explain why some are reluctant and some are willing to take on trust deed investing.

house moneyOver the past few years, the real estate business has made a resurgence throughout the United States. While there are many new properties and developments that are being made, one must wonder, are there any ventures that seem very risky from the outside.

You do not have to look any further, trust deed investing has taken on that risky role to many people that are in the real estate field. In fact, many banks and other financial institutions can be a little apprehensive when it comes to investing in trust deed partnerships. But, why is this? There are risks with other properties and projects, right?

Well, for many banks, the biggest thing that turns them off is the short lifespan of the loan itself. Usually, borrowers that are looking into trust deed investing want a short term loan. Often these loans, judging by the reliability of the borrower, could be paid off a year or two after being financed. Most banks want to find investments that will have longevity. Most of the loans that are lender by banks have a 30-year payment plan.

So what attracts people to trust deed investing?

Time is the main factor that attracts people to trust deed investing. Generally, banks will take an extended period of time to do a thorough check on your credit and prior investments. Most of the time when investors are looking to flip homes they want to do it fairly quickly. Most of the time the funding period only lasts one to two weeks before the property is placed back on the market. In the flipping business, the competition can be pretty steep so you must move as soon as possible when you find a potential buy.

So how do you combat this? You go to hard money lenders that are willing to cut out a lot of the time-consuming elements. You do not need to have the best credit score to get a loan from a lender for your investment.

On top of time management, you will get a nice return with trust deed investing.

That’s right most investors, when they have taken the right precautions will on average be able to get a 10% return. You will not always get that, but for the most part, you will be successful if the market is forgiving.

This type of investing is also very popular among people that have creative or unpredictable sources of income. With all these factors, trust deed investing is a great option for those who want the freedom to move from investment to investment with a degree of safety.

Level-4-Funding-Dennis-Dahlberg-Mort[1]Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com
http://www.Level4Funding.com
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

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About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.

Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Tuesday, November 22, 2016

What are the parties involved with trust deed investing?

Trust deed investing involves multiple people to make an investment work seamlessly. With normal real estate investments, you may take on the venture by yourself if you feel up to it. Sometimes you may need a partner that is willing to invest the time and money with you. However, with trust deeds there are multiple parties that you should be aware of.

img_16-150x150The first thing that you must realize when you decide to take on trust deed investing is that you will be dealing with people whether you like it or not. Certain processes or plans may take longer than expected or you may have to jump through a few more hoops before you are able to reach your finish line.

The big three that you will most likely fall into will either be; trustee, borrower or lender. The borrower and lender should be fairly simple to distinguish for the novice investor. The lender hands out the loan. This will usually be a hard money lender or a financial institution. Borrowers are the people or partners that need funding. Where some people get confused is the trustee. In California, by definition, this person holds the deed of trust for the security of the loan. In the event of a foreclosure, they are also giving the authority to sell the property to recoup money lost from defaulting.

In trust deed investing, the trustee has a lot of importance.

As stated before regular commercial real estate ventures only involve two parties. When a trustee is included you are able to have a mediator that is able to maintain the property title. This also means the trustee is the sole owner of the actual property unless the borrower was to default on their loan. The law requires the trustee not be affiliated with either the borrower or the lender. That being said, the trustee and be a single person, group or even a business.

Neutrality is one of the biggest things a trustee needs to be worried about. Throughout the entire the agreement it is the trustee’s, job to make sure that they do not favor one party over the other. This can cause friction between everyone if the trustee were to favor the borrower’s situation and vice versa. The trustee is also responsible for making sure the title of the property is transferred to the borrower after the payment period is completed.

In trust deed investing the trust also handles the foreclosure.

Of course, the trustee cannot officiate the hearing if there was a trial that was to take place. It is the job of the trustee to handle the Notice of Default. Many people think that this duty is given to the lender, not true in this case. It is the job of the trustee to take care of the foreclosure from beginning to the end. Most of the time it is the trustee’s obligation to get as much revenue from the sale of the property to make sure the lender’s loss is covered.

Level-4-Funding-Dennis-Dahlberg-Mort[1]Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com
http://www.Level4Funding.com
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

 You TubeFace Book Active Rain Linked In

About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.

Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Monday, November 21, 2016

How can a lender tell if a borrower is reliable for trust deed investing?

As a real estate lender, you will have hundreds of potential borrowers that will need your financial help. What sets certain borrowers apart the masses that file into your office? In trust deed investing how do you choose which venture will be the most profitable? There are certain characteristics that you should look for when vetting a potential client.

If you are reading this you are probably having a little trouble deciding between a handful of potential clients. You have come to the right place for advice. Hooray for you. In all seriousness, when it comes to trust deed investing you will have hundreds of different venture that will pique your interest. One month it could be the duo that wants to open a local hostel in the neighborhood. The next could be the moonlighter that wants to get their hands in the business.

Who ever it is, there is a litmus test that you should follow before making your decision on who you give your money to. For example, say you have a client that wants to open a boutique that will require a $800,000; they have a nice shiny and well thought out business plan for breaking into the market. The one hiccup that you find is the property value. When you correctly check you find that the property is only worth $300,000.

Since the margin of safety will not be able to cover the loan, this investment may not work in your favor if business were to hit a rough patch. Of course, you can take the investment if you believe that you will be able to make a return on your money. On the other hand, you could potentially find someone that will be able to give you more for the money. Due diligence is the key to trust deed investing.

Foreclosure is a normal thing when it comes to trust deed investing.

iStock_000001509328MediumThere will be ventures that will fail. Nothing in real estate lasts forever, and foreclosure could happen if your client is not careful. So what happens after your client defaults and foreclosure is in the pipeline? If you are in California usually the foreclosure process would last about four months after the client were to default.

As far as the selling process goes, that should take around 60 days; it may take a little longer if the property was improperly valued. Another thing that you have to take into consideration is bankruptcy. If your lender decides to file for bankruptcy that could add more time to the foreclosure process.

Character is everything when it comes to trust deed investing

One of the best tools a lender or investor can use is intuition. Sure you could look at your borrower’s credit file. You could extensively go through their business plan. But at the end of all your research, your gut could be your saving grace. If you do not feel as though the investment is not for you give it you someone else that is willing to take the risk.

Level-4-Funding-Dennis-Dahlberg-Mort[1]Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com
http://www.Level4Funding.com
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

 You TubeFace Book Active Rain Linked In

About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.

Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Friday, November 18, 2016

What does the borrower need to bring to the table when trust deed investing?

Arizona Home Loan Mortgage BrokerWhen it comes to trust deed investing preparation is the key to a successful venture. Lenders have their quality standards that they should adhere to, but what of the borrower? What must they do to make sure that the whole process goes as smoothly as possible? This brief piece will provide the newcomer with the tools they need for a successful investment.

When you were studying for your driver’s license you had to make sure that you had everything in order before you took the written and driving tests. If not you would have to go back and redo everything. The same goes for trust deed investing you want to make sure that before you attempt to borrow you have all your prerequisites taken care of.

Contingency is the most important word to keep in regard to commercial real estate. The first thing that you should focus on is a backup plan in any event something were to happen to you. For example, if you were to get hurt during the life of the investment, you would need to make the necessary arrangements so you do not default on the monthly payments. Each day investors are faced with unexpected setbacks. Since trust deed investing does affect your credit planning before hand will help you before your investment does too much damage.

In regard to credit, as stated in previous articles, you do not have to have the best credit in the world to take on a trust deed investment. There are other options you have to get money, such as a hard money lender, but you want to make sure that your credit is still acceptable. It does not need to be around 780, but having a little padding would not hurt.

Trust deed investing requires you to do a bit more work.

Commercial real estate, in general, requires you to do as much background work as possible so there are no mishaps that could hinder your investment. The biggest stumbling block that most investors face is the preliminary research that needs to take place. In regard to research, many fall short calculating the value of the property.

This, in turn, could affect your margin of safety if, in any event, you were to fall behind and default on your loan. Say you valued a certain property at $300,000 and you were able to borrow a loan $200,000, your margin of safety would be $100,000. Now fast forward a few weeks after the ink has dried, and you find out that the property was only worth about $250,000. Now if you were to run into any issues your margin of safety is dropped down to $50,000.

Is trust deed investing the right choice for you in your career?

One of the best things that you could do to prepare for a new investment is to know when you are not ready. It may be tough at first, but quitting before you figure out it is too late. It is much better to start from ground zero than to dig yourself out of a deep hole.

Level-4-Funding-Dennis-Dahlberg-Mort[1]Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com
http://www.Level4Funding.com
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

 You TubeFace Book Active Rain Linked In

About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.

Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Thursday, November 17, 2016

Trust deed investing gatekeepers: Who can lend you money for your investment.

Trust deed investing takes money just like all the other real estate ventures that you may undertake. You have a plethora of options that you could take when you are trying to fund your first trust deed investment. In this brief you will learn about all the institutions that are willing to give you a loan.

So you are looking to dive into the deep end of the trust deed investing pool, but you are having trouble finding lenders. You have found the perfect location, the perfect building and the deed of trust are available, as well. Now all you need is the loan. The process of getting a loan is complicated and nerve-racking even if you are not in the commercial real estate field. It could take weeks or months for certain loans to be approved; even then you are not guaranteed a loan at the end.

What happens if the place you are looking at has more than one party interested in it? You have to be able to quickly get those funds before someone else undercuts you. Luckily for you, if you are familiar with the commercial real estate business many of the lenders that you already know are able to provide you with the loans that you are seeking.

For example, let’s say you have a low credit score, and your local bank is not willing to lend you the money you need. In this case, a hard money lender would most likely yield the best outcome. If you decide to apply through a hard money lender, you can expect basically the same process with a regular investment. As usual, they will charge you higher rates than the bank normally would, but you would most likely receive the loan quicker. There is also an origination fee that is paid to the lender when you receive the loan. It is represented by posts that correspond to 1% of the loan amount.

Angel OakBridge loans can be used when trust deed investing as well.

Without a doubt, yes, you are able to use bridge loans for trust deed investing. In fact, more often than not hard money loans and bridge loans can be mistaken for the same thing. There are subtle differences, however, with a bridge loan you would typically want to have more reliable credit. Most of the time banks would lend a borrower a bridge loan.

There is one big advantage that bridge loans have over hard money loans; the property does not need to be in great condition. That being said, you do not want to purchase something that will not help with your monthly payments.

Make sure you do your research when trust deed investing.

So you know where you could go to receive help, but now how do you go about getting it. One of the best ways is by relying on your connections. Use people that have experience with trust deed investing. Look at their reviews online; email some people if you have to, as well. Just make sure you feel comfortable with your decision in the end.

Level-4-Funding-Dennis-Dahlberg-Mort[1]Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com
http://www.Level4Funding.com
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

 You TubeFace Book Active Rain Linked In

About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.

Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Wednesday, November 16, 2016

Trust deed investing can be very risky, but what could possibly go wrong?

cta-box2Trust deed investing has its benefits, but often many people have to face the downsides, as well. The rates could go up unexpectedly or there could be a mistake made on the documents that the borrower and lender have drawn up may have made an error. This can cause a mountain of issues that will need to be taken care of.

Variables are things that you should always think about when you are investing in commercial real estate. There is a myriad of things that could go wrong when you are dealing with commercial real estate. Things could go extremely well for a period of time, but what happens when your business plan fails? What happens when the dice roll a different way? The real question is what should you look out for when you are investing.

Trust deed investing is not fool proof. As an entrepreneur, you should make backup plans for your backup plans. Details, especially in trust deed investing, are the single most important things to any deal. One of the most common mishaps that cause trust deeds to fail is a missed number, name or small detail. For example, say you find a property that you estimated a certain value.

Now say the property value is not as high as you thought. The margin of safety could potentially be insufficient to cover the entirety of the expenses that may incur. We all know when it comes to real estate changes in property can happen at any moment. Now add in a random godly act, such as a tropical storm or flood, you may not be able to cover the needed repairs. This could end up leaving you in the hole of debt.

Do I still have to worry property value when it comes to trust deed investing?

Sadly yes, as stated before there could be something that could happen out of nowhere. Once this happens the borrower has to take the first loss on the investment. They are still required to pay back all the loan amount. If the borrower is unable to pay the loan back then foreclosure usually follows soon after. It is in the investor’s best interest to sell the property at a price that is less than the value of the loan, as well.

This will not always ensure that you will get your money back in full, but there is a strong chance that you will be able to get some form of payment for the investment. Make sure that the property value is sufficient to support the margin of safety.

Can bankruptcy affect trust deed investing?

Once again yes, bankruptcy can affect your trust deed investment. This will cause a few hiccups in the when you are trying to move ahead with foreclosing. In general, a foreclosure usually takes a couple of months to settle. When bankruptcy is involved an additional number of months to an already long process. Bankruptcy judges are also allowed to change certain things documents related to the trust deed. The interest, for example, can be changed to alleviate some of the circumstances the borrower is facing.

Level-4-Funding-Dennis-Dahlberg-Mort[1]Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com
http://www.Level4Funding.com
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

 You TubeFace Book Active Rain Linked In

About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.

Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Thursday, January 8, 2015

How Does Trust Deed Investing Work? What are the Benefits of Investing in Deeds of Trust

In the United States, there are two types of real estate transactions, true mortgages and deeds of trust trust deed investing. This type of investing differs from a true mortgage in that there are always three parties involved, the bank or lender, the borrower and a third party who is investing his/her personal capital in the deed of trust. If you want an investment that pay for college, investing in deeds of trust can be an opportunity to earn high interest rates with low investment risk.
sale. In a true mortgage sale, there are two parties involved, the bank or lender, and the borrower. The borrower is given the deed to the property he/she is purchasing and the lender has very little security or collateral. A second form of real estate investing is called

During trust deed investing, an investor acts as a third party during a home purchase transaction. The bank loans the money, the borrower purchases the property and repays the loan, and the investor, or trustee holds the deed to the property. The trustee holds the deed as security to ensure the repayment of the debt to the lending bank and the bank pays the trustee interest for this service.
Trust deed investing boasts high rates of returns on investment and can fit almost any budget. An investor typically earns anywhere between 7% and 12% on trust deed investments. This is significantly more than any savings bonds, savings accounts, and most stock options.


Investing in trust deeds is generally considered to be a fairly safe investment strategy because the investment is backed by actual real estate collateral. An investor can literally drive by and see his/her investment. The trustee can also help insure his/her investment in trust deeds by having property appraisals and working with a licensed broker for the transaction. Another way to secure the investment is to invest only in the first position in the deed of trust. The first position ensures that this trustee will be paid first in the event of a default.

Call your broker to add trust deed investing to your child’s college fund portfolio. Start earning higher interest rates with less risk today.

Level 4 Funding LLC
23335 N 18th Drive Suite 120
Phoenix AZ 85027
623-582-4444



Friday, December 19, 2014

Minimizing Risk When Investing in Deeds of Trust

Like all investments, investing in trust deeds does has an element of risk. The main risk for the trust deed investor is that the borrower will default on his/her loan. If the borrower stops making payments, it is then the responsibility of the trustee to sell the property on behalf of the lender. This process is called non-judicial foreclosure. Once the property is sold, the lender takes back its initial investment. If there is any money left over, the trustee is then paid.

If you are interested in investing in deeds of trust, there are a number of steps you can take to insure that you are making a safe investment. First and foremost, make sure that you work with a reputable, established lender. A bank or mortgage broker that has been around for a while with a good reputation doesn't give out loans to borrowers who are not able to repay them. Of course there are always exceptions, but generally reputable lenders are more selective with their loans than lenders who are just starting out.

Secondly, when you are investing in trust deeds, you can help insure you money against loss by having a fair and accurate appraisal before the borrower purchases. If the property is appraised well then you can be confident of its value moving forward. Then if the borrower does end up defaulting on the loan, you can sell the property for a high enough price to pay yourself back. This is perhaps one of the greatest benefits of trust deed investing because your investment is backed by real estate that has real monetary value, not just company profits like a stock. You can use the real estate to recoup your funds if necessary.

Trust deed investing is a great investment tool to earn high interest rates with little risk of losing money because your investment is backed by real estate.

Make sure to talk with a broker before you attempt investing in deeds of trust. A broker can work with you to find the best loan lengths, terms, and interest rates. He or she can also help you navigate the ins and outs of the specific laws and regulations in your state.

Dennis Dahlberg
Level 4 Funding LLC
23335 N 18th Drive Suite 120
Phoenix AZ 85027
623-582-4444

The Basics of Trust Deed Investing

Many smart investors incorporate the strategy of investing in deeds of trust as an easy and relatively low risk way to help grow their retirement accounts. With rates of return as high as 12% and real estate collateral, investing in trust deeds can be a good addition to a well-rounded investment strategy.

Trust deed investing is an investment tool that can help many people reach their monetary goals for invest in deeds of trust, it is important to understand the basic types of mortgages available and why trust deed investing is a win/win situation for all parties involved.
retirement. It is a useful addition to your retirement investing strategy because it is relatively low risk and low maintenance with a high rate of return. Before deciding to

The first type of mortgage is what is known as a true mortgage. In this type of real estate transaction, the borrower purchases a property with funds that are supplied by a bank or other lending institution. The legal and equitable deeds to the property both belong to the borrower as the owner of the property. This can pose an obstacle to the lender should the borrower default on his/her loan. Since the borrower holds the deed to the property if he/she defaults the lender must go through what is known as the process of judicial foreclosure. This involves the lender obtaining a court order before the home can be sold without the borrower’s consent. This can be a lengthy and expensive process for the lender.

The second type of “mortgage” situation involves a deed of trust. In this lending situation, there are three parties involved, the lender, the borrower, and a third party known as the trustee. The trustee purchases a deed of trust from the lender which gives him/her the right to hold the legal deed to the property on behalf of the lender. Deeds of trust can be purchased for anywhere from $1,000,000 and up. Once the trustee buys the deed, he/she is said to be investing in deeds of trust. Like any investment, the trustee earns interest from the lender.

The interest rates earned on deed of trust investments 
are typically higher than other types of investments. 

Some investors earn as much as a 12% rate of return on their investment. As long as the borrower continues to pay his/her loan to the lender, the trustee earns money for the term of the investment with no further work.

Level 4 Funding LLC
23335 N 18th Drive Suite 120
Phoenix AZ 85027
623-582-4444













Wednesday, December 10, 2014

Trust Deed Investing with Limited Resources

One common misconception about trust deed investing is that it can only be done by the very wealthy. This is not true. There are many lower cost options for budgets of almost any size. If you are on a budget, you might consider pooling your resources with a friend. Make sure that you both agree on the property and borrower that you are investing in and you can split the monthly interest payments. This is a way to purchase a larger deed of trust without investing more money. Some brokerage firms also offer trust deed investing pools where you can combine your resources with other to make a larger investment.

In addition, you can look into investing in lower value deeds of trust. Things like cemetery plots can actually be a great deed investment and they are usually less expensive because they are smaller and less valuable than a larger property or house. In some cases and states it is also possible to do partial trust deed investing also know as Fractional Trust Deeds. Basically you would purchase a part of a deed for a shorter period of time like 12 months compared to several years. You can also look into investing in deeds of trust that have been defaulted. This can be a great way to get into trust deed investing but is a very specialized niche. It is usually more risky but the investments are cheaper and often the returns are quite high.

Trust deed investing is a great investment tool to earn high interest rates with little risk of losing money because your investment is backed by real estate.


Make sure to talk with a licensed broker before you attempt investing in deeds of trust. A broker can work with you to find the best loan lengths, terms, and interest rates. He or she can also help you navigate the ins and outs of the specific laws and regulations in your state. Your broker can also help you invest your limited funds in the smartest way possible to earn the highest returns.

Level 4 Funding LLC
23335 N 18th Drive Suite 120
Phoenix AZ 85027
623-582-4444









Foreclosure and Trust Deed Investing: What You Need to Know

Investing in trust deeds is generally considered to be a fairly safe investment strategy. Like any investment, there are risks, and knowing how to protect yourself and your money is a crucial step in having a successful investment.

Investing in deeds of trust is a great way to earn high, fixed interest without having to do much work.  is a specific type of real estate investment where the investor invests money as a third party in the mortgage process. The bank or lender loans money to the borrower, the borrower repays the money to the bank and the property is secured by a Deed of Trust.  The Deed of Trust gives the Trustee (a third party) the ability to sell the property if the borrower defaults.  As an investor you can purchase the Deed of Trust from the lender and then you become the bank and receive the payments.   Interest rates a generally higher than most other investments at anywhere from 9 to 12 percent. Deeds of trust are a fixed investment so you earn that interest rate over the length of your investment.
Investing in deeds of trust

Now that you know the benefits of investing in trust deeds, you are probably wondering how exactly
it works and what your role as the investor is. As the investor, you invest money to hold the legal deed to the property as was discussed previously. You do not live at the property nor do you have to maintain it, the borrower does this and he/she holds the equitable title to the property. If the borrower makes payments on time, all the lender has to do is earn interest from for the length of the investment term. Investment terms can cover anything from a few months to several years. Interest is fixed and paid monthly as additional, relatively stable source of extra income.

However, as with any investment there is some risk associated with trust deed investing. The greatest risk is that the borrower will stop making monthly payments. If this happens, you as the trust deed holder, will begin to initiate the process of foreclosure on the property. The trustee has the power to sell the property for the lender. If the property is sold for a loss, the trustee will lose his/her initial investment.

Protecting Your Money during Trust Deed Investing


Although it is rare, defaults do happen and it is important to take every step necessary to secure your initial investment. One of the best rules of thumb is to never invest in a trust deed on a property you would not want to own. This does not mean that you want to live there, but that you could see the benefits of owning it as a rental, or it is in a desirable location, or has some other feature that gives it extra value. You also need to work with a good team that involves an appraiser. An accurate appraisal on a property helps make sure that it can be sold for the value of the loan, should a foreclosure situation arise. As long as the lender can recover its funds, anything left over will pay back your investment before transferring to the borrower.

Another key to protecting your money is to make sure that the property is always covered by a comprehensive hazard insurance policy. Fires, floods, and other natural and man—made disasters happen. If the home is destroyed, and insurance policy will help pay back both the lender and trustee. Make sure that the hazard insurance is current and sufficient on any properties that you are investing in trust deeds for.



Finally, you can help protect your money by always holding the first deed of trust on a property. Some lenders sell additional shares of trusts in the form of second or even third trust deeds. Basically what this does is put you in a line to be paid back in the event of default. The first trust deed holder is always the first to be paid back their investment if the loan defaults. Second and third trust holders often never recoup their funds.

Finding the right broker can make all the difference in trust deed investing.


Make sure that you are using a broker or firm that knows the ins and outs of trust deed investing. Ask about the team of Realtor, appraisers, home inspectors, and other professionals they work with to secure you investment. Also, make sure that they know you are only interested in being the first deed holder on any trust deed investments. Do your research about applicable laws and special circumstances to help protect your money.

Level 4 Funding LLC
23335 N 18th Drive Suite 120
Phoenix AZ 85027
623-582-4444