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.

There 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.

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

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.

Pitfalls of Trust Deed Investing - Can you actually make money

How Can I Make Money by Investing in Deeds of Trust?

We all want to make the right kind of choices with our money. Sometimes it is hard to know what can be the best option for your money and how you can best make a profit. With the struggling economy, it is more important than ever to thoroughly research your options.

Setabay Loan Trust Deed Investing

Many experts think that investing in deeds of trust is a great way to make the invested money back, along with a good amount of return. You will want to understand how most people are making money by investing in deeds of trust.

The process of making money by investing in deeds of trust you are becoming the bank.

Trust Deed Mortgage Broker

You are just the bank for someone else. The bank makes money by using the money its customers puts in savings and then lends it out in loans to other customers. They have to pay a small amount of interest to the customers but they get a larger amount of interest from the loans. As a trust deed investor you will be doing the same thing but without having to pay out interest. You will just make money! Like banks however, you will secure your loan with a promissory note secured by a recorded Deed of Trust. When they do this, they have a limited risk because they will get the property on the note is they are not paid. You will also have the same limited risk. This is exactly what you will be doing with a little more risk, but a chance of a higher profit. Instead of using other people’s money you will be loaning out your own. All the money comes to you, instead of the bank, and minus the small amount of interest paid on the deposited money.

What do I need to get started investing in deeds of trust?

There are some restrictions in some states on how investing in deeds of trust can work for an individual. For example, in California, no one trust deed can be worth more than 10% of your net worth. So you cannot have more than 10% of your total net worth invested in trust deeds.

How much money you will make per year depends on the length of the individual investment. Some investments last for only three months and some will last for several years, depending on what you choose to pursue and someone interested in investing in deeds of trust.

What are some of the risks? What do I need to be aware of before I begin investing in deeds of trust?

There are some risks, but if you are aware of them you can make a plan to lower some of the risks. Here are a few of the biggest risks that come with investing in deeds of trust.

1. Investing in deeds of trust can be an unstable investment. It will be impacted by the fluctuating market conditions. Real estate values will most likely go up and down. There will be times when it will help you, but there will be other times when it may hurt your profit margin. And you will need to realize that not only the present market, but the future one may affect your investment as well. These can be difficult to predict, even for the most knowledgeable.
2. You will also find that many people are hesitant to purchase. The problems with the current economy are going to impact your profit margin. However, most trust deed investors can certainly benefit from this current market trend! It is because of the poor economy and the resulting foreclosures that make the amount of money you can make possible. Because the banks are unwilling to loan, you can charge higher interest rates.
3. Bankruptcy is also a big concern. If your borrower files for bankruptcy your investment will be a big problem. It is very important to be sure that all the paperwork is in order. Make sure you have the title to the property they have borrowed on so that if there is any kind of problem with payments, your investment will still be protected. This is a good choice for all interested in investing in deeds of trust.
4. Natural disasters and environmental concerns can be a danger to your property investment. Avoid known locations for natural disasters like hurricane zones, earthquake areas, tornado ridden counties, and overdevelopment on hills that may lead to a landslide. To help mitigate any problems with Mother Nature, invest in some home insurance to take the edge off should something happen.

Investing in deeds of trust can be a good opportunity, and as long as you make a plan to avoid these risks, you can make a lot of money.

Mortgage Broker

Setabay Loans
Dennis Dahlberg
23335 N 18th Drive Site 120
Phoenix AZ 85027
www.SetabayLoan.com

What do I need to know about Trust deed investing?

Trust deed investing does have many certain alluring qualities. For those that have a firm grasp on what they are doing, trust deed investing can make a very sizable return on your investment. Like most things, it is important to understand exactly how it works to become successful. Let me outline some of the major points of trust deed investing so that you can decide for yourself if it is for you.

First of all, it is vital that you understand what a deed of trust is. A deed of trust is a real estate

transaction that is used in some states use instead of mortgages. This involves three different parties. They consist of a lender, a borrower, and a trustee. As you would expect, the lender gives the borrower money. In exchange the borrower gives the lender promissory notes, or a signed document that promises to pay a certain amount by a certain date. The borrower will also transfer real property to a third-party trustee. If the borrower does not pay the loan and defaults, the trustee can then take control of the property.

Most of the time, the trustee is a title company. There are two ways this is handled, dependent upon the state that you live in. One way is to actually transfer the legal title to the trustee. Another way is where the trustee has only a lien on the property. Trust deeds usually come with a “power-of-sale” clause. This allows the trustee to sell the property without having to get a court order. By doing this, those who are interested in trust deed investingsecure their investment.

Setabay Loans

Dennis Dahlberg

23335 N 18th Drive Site 120

Phoenix AZ 85027

www.SetabayLoan.com

Are there any risks with Trust deed investing?

What are the risks with Trust deed investing?

There is no such thing as a sure thing, and that is especially true with Trust deed investing. One such risk is that this is not a liquid investment. You will not be able to cash it in quickly for ready capitol like you may with some government bonds or shares. The money is tied up in someone else and you will have to wait until the loan is paid back. So until the borrower pays off the loan, or if there is a foreclosure, until the property is sold.

There are also a lot of risks on the legal side. With so much important paperwork, there is

People You Can Trust

sometimes a risk that there may be an error in the documentation or in the due diligence side of the Trust deed investing papers. This may lead to litigation or title disputes that will have to be settled in court. These legal problems may escalate, making it very expensive in the long run, but you will have to do what you can to protect your investment. It is incredibly important that you have people working with you that you can trust. It also helps to go over the paperwork many times to make sure every detail is correct before you finalize.

The biggest risk, of course, in providing a loan, is that borrower will default. It will then be up to the investor to handle the property. You will have to oversee the sell, and hoe that the market is good enough to sell quick and fast so that you can make a profit.

How can I make good decisions regarding trust deed investing? Is it worth it for me to do this type of investment?

While there are a lot of risks that you need to be aware of in trust deed investing, there is also a potential for a good return on your investment. It is wise to proceed with caution, but the chance for a profit is alluring!

Seta Bay Loan

Setabay Loans
Dennis Dahlberg
23335 N 18th Drive Site 120
Phoenix AZ 85027
www.SetabayLoan.com