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

Trust 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.

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.

What should you use to fund trust deed investing in this market?

When investing in commercial real estate you have dozens of different options for funding. Trust deed investing is no different you just have to look in the right places. It may be hard at first, but with a little work and grit you should be able to find the fight option for your investment.

For entrepreneurs, one of the biggest obstacles you may come across is funding for an investment or project you are looking to acquire. It could be months or years until you can be fully funded for the venture you are interested. Luckily for you reading this, there are hundreds of option that are available to you. If you are just starting out in this area of real estate you have an advantage many could not take advantage of 30 years ago, digital outreach.

Let’s face it many of us live in or near large metropolitan cities, and it can be extremely difficult trying to get money from your local bank. Crowdsourcing is one of the best ways that many people are able to receive funding for the investment that they are working on. People naturally want to be a part of something that is bigger than they are.

For example, in the say you are thinking of investing in a church that has been in a certain neighborhood for years; the community will fight to keep a piece of history open. When you are able to get the neighborhood involved with the investment it gives it a meaning deeper than making money or curb appeal.

Having friends that are willing to help you out in a pinch will always be the best option for you in the end. Take trust deed investing, for example, you are able to split the note between multiple people if you cannot cover the cost yourself. In trust deed investing you are able to divide the note with up to ten investors. In turn all in the involved receive their own percentage and they would receive a proportional amount of the monthly fees. This is called a fractionalized note.

IRAs can be used for trust deed investing also.

Yes, you read that right you are able to use an IRA for trust deed investing. The best way that you could go about this is to go through a company that specializes in this type investing. Luckily in California, there are a few firms that are able to help you. The percentage you have to pay is fairly low as well. Usually, it ranges from around 0.3% to 0.5%.

When you do use your IRA or another retirement account you are able to reinvest into it tax-free. Pro-tip: Trust deeds are generally classified as regular income; if you are able to use your retirement you may be free of certain taxes.

You have dozens of options for funding when it comes to trust deed investing, but…

If you do not use them you are going to waste a lot of time and money trying to take on everything by yourself. One of the best things you could do is find someone that specializes in trust deed investing and have them give you pointers on where the best resources can be found. You could even potentially find a partner in the venture you want to take on.

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 and How to Risk Less

Many homeowners think the only people involved in their mortgage are them and the bank. However, this is not usually the case as most loans also have a trustee who has engaged in the process of trust deed investing as a way to build an investment portfolio.

Trust deed investing is generally considered a relatively safe investment because it is backed by real property than can be used as collateral in the event of default. However, like any investment there are risks. Namely, deeds of trust are not insured by the FDIC so there is not guarantee that you will get your money back. Also, if the borrower declares bankruptcy then the home cannot be easily foreclosed on without a lengthy legal process. Depending on the outcome of this process, it is possible to lose some or all of your investment.

These risks are not unique to trust deed investing as every type of investment does have some inherent risk. There are a few ways to minimize these risks and maximize your profits. First and foremost, work with a private lender or equity firm that is experienced in trust deed investing. Make sure that your lender has loaned on deeds of trust before and can explain the process to you, including any and all risks.

You can also help mitigate risks by doing your due diligence. Research a property’s title status and market value. This will help you make sure there are no issues with the title that would prevent a foreclosure. Knowing the market value will help you ensure that the property will be worth the amount of the loan or more in the event of default. This is especially important because the bank will get paid back before you do so you want to be sure there is enough money to recoup your investment. Sound intriguing and want to know more? Keep reading to learn the ins and outs of trust deed investments and how you can get started today!

How Trust Deed Investing Works

When you buy a property in Arizona and finance through a bank like Wells Fargo or Bank of America, most people think the bank holds the deed to the property. This is not the case. Usually someone’s grandma in Oklahoma or an investment banker in New York purchases a promissory note, funds your loan, and retains the legal title to the property. Sounds complicated, but really it is not, it is all part of trust deed investments.

The investor in trust deed investments purchases an interest in a mortgage through a promissory note. The investor can purchase the full mortgage or a part of it. If the investor purchases the full deed, he/she must have enough capital to fund the whole mortgage. If a fraction is purchased then the investor puts up a fraction or percentage of the value of the mortgage or promissory note. In this case the investor has the option to purchase a first or second deed of trust. A first deed of trust means that the investor is first in line to be paid back in the event of default while a second deed investor is more at risk for losing his money.

Once you have purchased trust deed investments, you officially hold an interest in the mortgage. You also hold the legal title to the property on behalf of the bank (the borrower retains possession of the physical property). Each time the borrower makes on time payments, you earn interest from the bank. The interest rates on trust deed investments are often higher than the interest rates on stocks and bonds. Once the loan is paid in full either by sale or after the mortgage term, you get your initial investment back. Basically, the bank pays you to hold onto a piece of paper for them.

But why? This is the main question that holds many people back from trust deed investing. Why would the bank pay you interest to hold a paper for them? The reason has to do with foreclosure procedures in the event of default. The bank cannot hold the title to a property so if there is no trustee, the borrower retains both the legal and physical tittle to the property. If the borrower defaults, this makes it very difficult to foreclose. If the legal title is held by a third party, a trustee, the trustee can foreclose on behalf of the bank, making the process much quicker for the lender.

Trust Deed Investing is a Win-Win for the Investor and the Bank!

Learn more about this lucrative investment strategy by calling a private lender or equity firm today! While trust deed investments are safe when done correctly, loop holes and other paperwork issues can get in the way. Make sure you use a financial professional to help you navigate the world of trust deeds!

Dennis Dahlberg
Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:     (512) 516-1177 
dennis@level4funding.com
www.Level4Funding.com

NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027

Risks and Benefits of Trust Deed Investing

Trust deed investing can provide substantial rewards with minimal risks for investors. There are a few different ways to get started in trust deed investing and finding the right financial professional to help you can make all the difference.

Most investors know about stocks, bonds, and real estate investing. Real estate investing can be a very lucrative way to build your investment portfolio. You can invest in real estate in a number of ways like buying a fixer-upper, or purchasing a home to rent out. While almost everyone knows about making money on a fix and flip or as a landlord, there is another, less common type of real estate investing called trust deed investing. Trust deed investing involves three parties, the borrower, the bank, and the trustee. If you are investing in deeds of trust, your role is that of the trustee and you act as an intermediary between the borrower and the lender. You hold the legal title to the property until the loan is paid off or unless there is a foreclosure.

While you can earn back your investment in the event of a foreclosure, the real benefit of trust deed investing is when all is going well. The bank or lender will pay you interest rates into the double digits to hold the title to the property. As long as the borrower is making on time payments, you are earning interest every month. Once the loan is paid in full, you also get your initial investment back. You can purchase deeds of trust through a private lender or other investment professional.

As the trustee, your job is basically to protect the lender in the event of default. If the borrower defaults on the loan, the lender would have to take the borrower to court and could not foreclose on the property until after a lengthy legal process. By using a trustee, the lender has a second option. The trustee can foreclose on the property on the lender’s behalf and help the lender recoup its investment. In the event of a foreclosure, some of the sale proceeds go to you as the trustee to help recoup your investment as well.

How to Make Money and Grow Your Wealth

If trust deed investing sounds intriguing, there are a few ways to get started. The first and most important step is to find a private mortgage company or investment firm that loans on promissory notes. From here, you should be able to decide how much you want to invest. You can purchase an entire deed as a single investor. This is one of the safest ways to invest because you are the only investor that needs to be paid back in the event of default.

If investing in the full deed is out of your budget, there are still ways to get into trust deed investing. You can invest as a fractional investor and buy a portion of the deed. If this is your plan, finding the right broker is crucial. Depending on whether you are the first investor, your investment may be less safe. Your investment professional can work with you to explain how to purchase a first deed of trust vs. a second deed of trust. This is important because a first trust deed holder is the first investor paid back in the event of default. If you are a second deed holder, you are at a higher risk for losing some or all of your investment.

Your private lender should be able to fully explain all of the risks to you and help you make the right choice when it comes to trust deed investing.

If trust deed investing sounds like a good fit for you, call a lender today!

Here at Level 4 Funding we specialize in deed of trust lending and other types of alternative investment and funding options. You won’t find trust deed investing by walking into your local bank so you need a private lender like Level 4 Funding. We know that trust deeds are not an investment that many people take advantage of and we know how much money you can make by doing so. We will be here every step of the way to answer your questions and help grow your money. 

Dennis Dahlberg
Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:     (512) 516-1177 
dennis@level4funding.com
www.Level4Funding.com

NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027

Trust Deed Investments: How to Make Your Money Work for You!

When it comes to investing, there are many, many options to choose from. While conventional options like stocks or bonds can be lucrative, trust deed investments are a lesser known type of investment that can yield high interest rates and low risk.

When you buy a property in Arizona and finance through a bank like Wells Fargo or Bank of America, most people think the bank holds the deed to the property. This is not the case. Usually someone’s grandma in Oklahoma or an investment banker in New York purchases a promissory note, funds your loan, and retains the legal title to the property. Sounds complicated, but really it is not, it is all part of trust deed investments.

The investor in trust deed investments purchases an interest in a mortgage through a promissory note. The investor can purchase the full mortgage or a part of it. If the investor purchases the full deed, he/she must have enough capital to fund the whole mortgage. If a fraction is purchased then the investor puts up a fraction or percentage of the value of the mortgage or promissory note. In this case the investor has the option to purchase a first or second deed of trust. A first deed of trust means that the investor is first in line to be paid back in the event of default while a second deed investor is more at risk for losing his money.

Once you have purchased trust deed investments, you officially hold an interest in the mortgage. You also hold the legal title to the property on behalf of the bank (the borrower retains possession of the physical property). Each time the borrower makes on time payments, you earn interest from the bank. The interest rates on trust deed investments are often higher than the interest rates on stocks and bonds. Once the loan is paid in full either by sale or after the mortgage term, you get your initial investment back. Basically, the bank pays you to hold onto a piece of paper for them.

But why? This is the main question that holds many people back from trust deed investing. Why would the bank pay you interest to hold a paper for them? The reason has to do with foreclosure procedures in the event of default. The bank cannot hold the title to a property so if there is no trustee, the borrower retains both the legal and physical tittle to the property. If the borrower defaults, this makes it very difficult to foreclose. If the legal title is held by a third party, a trustee, the trustee can foreclose on behalf of the bank, making the process much quicker for the lender.

What Happens to the Investor?

In the event of a foreclosure, the investor is at a greater risk for loss than if the borrower pays off the loan in full. However, trust deed investments are at least backed by actual real estate. Once the lender’s investment is repaid, the investor also gets their money back, assuming there is enough left from the foreclosure sale. This makes trust deed investing a bit safer than stocks because it is backed by something with real value.

Since the investment is backed by real estate, there are ways to make it safer. If you are considering trust deed investments, make sure that you are the first note holder. This will make you a higher priority when it comes to recouping your initial investment. Also, do your research. Make sure the deed you are investing in does not have any title issues or claims against it. Finally, make sure you know the market value of the property that the deed backs. Knowing the market value will help you decide if you are making a smart investment. Always assume that the property could go to foreclosure and you may need to be able to sell it quickly to earn back your money.

If trust deed investing sounds like a good fit for you, call a lender today!

Here at Level 4 Funding we specialize in deed of trust lending and other types of alternative investment and funding options. You won’t find trust deed investing by walking into your local bank so you need a private lender like Level 4 Funding. We know that trust deeds are not an investment that many people take advantage of and we know how much money you can make by doing so. We will be here every step of the way to answer your questions and help grow your money. 

Dennis Dahlberg
Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:     (512) 516-1177 
www.Level4Funding.com

NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027

Trust Deed Investing: Good Lenders Are There When You Need Them!

Many homeowners think the only people involved in their mortgage are them and the bank. However, this is not usually the case as most loans also have a trustee who has engaged in the process of trust deed investing as a way to build an investment portfolio.

When a mortgage is approved, underwritten and recorded, many people imagine that there are only two parties working together, the bank and the borrower. However, this is not usually the case. In most mortgage transactions, there is a third party who works behind the scenes called the trustee. The trustee engages in something called trust deed investing by purchasing a promissory note from the lender. The trustee then holds the legal title to the property on behalf of the bank. The bank pays the trustee interest to hold the title on its behalf.

You may find yourself wondering, why would the bank do this? Why pay money to someone to hold onto a piece of paper for you? The bank engages in trust deed investing to help protect its assets in the event of default. If a borrower defaults on a mortgage, the bank has to take them to court to foreclose on the property and get its money back. This is a long, expensive process and there is always the possibility that they bank may lose. However, if the mortgage loan has a trustee who holds the title, the trustee can foreclose on the property on behalf of the bank. This can be done without a court hearing and is a much faster process. Once the foreclosure is complete, the lender will get its capital back and any remaining funds are paid to the trustee and finally the borrower.

Benefits of Trust Deed Investing

If trust deed investing sounds intriguing, there are a few ways to get started. The first and most important step is to find a private mortgage company or investment firm that loans on promissory notes. From here, you should be able to decide how much you want to invest. You can purchase an entire deed as a single investor. This is one of the safest ways to invest because you are the only investor that needs to be paid back in the event of default.

If investing in the full deed is out of your budget, there are still ways to get into trust deed investing. You can invest as a fractional investor and buy a portion of the deed. If this is your plan, finding the right broker is crucial. Depending on whether you are the first investor, your investment may be less safe. Your investment professional can work with you to explain how to purchase a first deed of trust vs. a second deed of trust. This is important because a first trust deed holder is the first investor paid back in the event of default. If you are a second deed holder, you are at a higher risk for losing some or all of your investment.

Your private lender should be able to fully explain all of the risks to you and help you make the right choice when it comes to trust deed investing.

If trust deed investing sounds like an investment option you want to explore, give us a call today!

Here at Level 4 Funding we specialize in alternative investment strategies like trust deed investments. Our financial professionals can help explain the process and answer any questions you may have. We will also make sure that you know all the risks and benefits so you can make an informed decision about how to invest your money. Call us today for sound financial advice and to get started trust deed investing. 

Dennis Dahlberg
Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:     (512) 516-1177 
www.Level4Funding.com

NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027

How to Make Money with Trust Deed Investing

 Trust deed investing can provide substantial rewards with minimal risks for investors. There are a few different ways to get started in trustdeed investing and finding the right financial professional to help you can make all the difference.

Most investors know about stocks, bonds, and real estate investing. Real estate investing can be a very lucrative way to build your investment portfolio. You can invest in real estate in a number of ways like buying a fixer-upper, or purchasing a home to rent out. While almost everyone knows about making money on a fix and flip or as a landlord, there is another, less common type of real estate investing called trust deed investing. Trust deed investing involves three parties, the borrower, the bank, and the trustee. If you are investing in deeds of trust, your role is that of the trustee and you act as an intermediary between the borrower and the lender. You hold the legal title to the property until the loan is paid off or unless there is a foreclosure.

As the trustee, your job is basically to protect the lender in the event of default. If the borrower defaults on the loan, the lender would have to take the borrower to court and could not foreclose on the property until after a lengthy legal process. By using a trustee, the lender has a second option. The trustee can foreclose on the property on the lender’s behalf and help the lender recoup its investment. In the event of a foreclosure, some of the sale proceeds go to you as the trustee to help recoup your investment as well.

While you can earn back your investment in the event of a foreclosure, the real benefit of trust deed investing is when all is going well. The bank or lender will pay you interest rates into the double digits to hold the title to the property. As long as the borrower is making on time payments, you are earning interest every month. Once the loan is paid in full, you also get your initial investment back. You can purchase deeds of trust through a private lender or other investment professional.

Pitfalls of Trust Deed Investing and How to Risk Less

Trust deed investing is generally considered a relatively safe investment because it is backed by real property than can be used as collateral in the event of default. However, like any investment there are risks. Namely, deeds of trust are not insured by the FDIC so there is not guarantee that you will get your money back. Also, if the borrower declares bankruptcy then the home cannot be easily foreclosed on without a lengthy legal process. Depending on the outcome of this process, it is possible to lose some or all of your investment.

These risks are not unique to trust deed investing as every type of investment does have some inherent risk. There are a few ways to minimize these risks and maximize your profits. First and foremost, work with a private lender or equity firm that is experienced in trust deed investing. Make sure that your lender has loaned on deeds of trust before and can explain the process to you, including any and all risks.

You can also help mitigate risks by doing your due diligence. Research a property’s title status and market value. This will help you make sure there are no issues with the title that would prevent a foreclosure. Knowing the market value will help you ensure that the property will be worth the amount of the loan or more in the event of default. This is especially important because the bank will get paid back before you do so you want to be sure there is enough money to recoup your investment.

Find the right lender to guide youthrough the process of trust deedinvesting!

The right lender is key to helping you navigate the world of trust deed investing. Make sure you choose someone who is experienced and knowledgeable about deeds of trust and how the investment process works.

Dennis Dahlberg
Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:     (512) 516-1177 
www.Level4Funding.com

NMLS 1057378 | AZMB 0923961 | MLO 1057378
23335 N 18th Drive Suite 120
Phoenix AZ 85027