Learn To Be A Fix & Flip Investor

Wednesday, January 4, 2017

Deed of Trust Definition - What is a Deed of Trust

What is a Deed of Trust?

A deed of trust (also know as trust deed) is a deed (piece of paper usually recorded at the county) that gives legal title to real estate to a trustee. It secures the note (Mortgage).

There are three parties to this type of title. They are:

The Trustor (Borrower),
Beneficiary (Lender) and a
Neutral 3rd part called the Trustee.

They are written so that the lender gives money to the borrower to purchase a real property (home) and the borrower signs a deed of trust giving the power of sale for property to the natural 3rd party trustee to be held in trust for the lender. (I like to think the trustee takes the Deed of Trust and puts it in the top drawer of their desk and waits.) The borrower owns the property, but the title is held by the trustee.

This is noted in the Deed of Trust and is called the ‘power of sale clause’ for example:

About 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, January 3, 2017

Private Hard Money Lender In Arizona

Setabay LLC

22601 N 19th Ave Suite 112

Phoenix AZ 85027

Private Hard Money Arizona

Hard Money Lender Arizona

Trust Deed Investing Arizona

Trust Deed Investing - How to Invest - Risks and Rewards

By Dennis Baranowski, Esq.

Geraci Law Firm

Investing in trust deeds is nothing new. Investors have often sought investment in either fractional or entire trust deeds because of the better than average rate of return and the security that comes in the form of pledged real property.

Unlike stocks or bonds, where the investor is relying on market conditions to dictate returns, investing in a trust deed typically offers a fixed rate of return in the form of monthly payments and in most cases a return of capital at maturity. This type of investment generally provides higher yields on capital with less risk than other market offerings.

The basic components of a trust deed investment are

1) a promissory note signed by the borrower and

2) a deed of trust which secures payment of the promissory note by establishing a lien
against real property upon the recording of the deed of trust in the county where the real property is located.

The trust deed holder is the lender, just like a bank, credit union or other financial institution. Trust deed investment allows an investor to participate in a loan secured by real property by purchasing all or a portion of the note and trust deed attached to a particular property and borrower.

The investor can either purchase the entire loan or a just fractional share. An investor that has adequate capital will often finance all of a trust deed loan. An investor that is the sole holder of a trust deed loan will enjoy more control over their investment in that the investor will be the sole decision maker with respect to collection of late payments, foreclosure, modifications and forbearances. Fractional participation in a trust deed loan will result in less control over the investment than owning the entire trust deed loan, but it provides an excellent vehicle to introduce investors to investing in trust deed loans. With a fractional trust deed loan, the total investment required is often less than owning 100% of the trust deed loan and the risk of the trust deed loan is shared by two or more investors. The fractional trust deed investor trades off the decreased exposure to loss with the sharing of control over the oversight and management of the investment with the other investors.
Investors that prefer fractional trust deed investments often will participate in multiple fractional trust deed loans in order to spread the risk of loss rather than placing all of their eggs in a single basket.

Investment in trust deed loans offers an array of variables for each investment, including varying returns, property types, length of the loans, and risk profile. In most instances, a greater yield will be realized by investing in higher risk trust deed loans, such as second or third position deeds of trust and loans where the total amount of loans secured by the property represent a larger percentage of the value of the property, as opposed to investment in loans that are secured by first trust deeds with low loan to value ratios. Investing in multiple trust deed loans provides an excellent opportunity for consistent cash flow, since the chances that all borrowers will stop making payments is not likely, especially if the loans are properly underwritten.

Whether there is a single investor or multiple investors, a trust deed loan needs a loan servicer to manage the loan, including the collection of monthly payments on behalf of the investors and to disburse such payments, less fees and costs, to the investors pro rata. The loan servicer is often the broker who arranged the trust deed loan for the investors, but could also be a third party provider. The arrangement with the loan servicer is governed by a loan servicing agreement between the investors and the loan servicer. Typically the loan servicing agreement delegates authority to the servicing agent to receive payments, pay distributions to the individual investors, and communicate with and provide documentation to the borrower. The loan servicing agreement also provides instructions about the collection and deposit of funds, instructions on handling delinquent accounts, and limited power of attorney to enforce the deed of trust contract. The primary job of the servicer is to manage the trust deed investment account and protect the interests of all investors. This responsibility may include managing accounts that are not performing or are in default, and initiating collection activities. When investing in trust deed loans, emphasis should be on engaging a servicing agent who is experienced, competent, and lends confidence that he or she is looking out for your interest.

Most established servicing agents are good at what they do. They already have established systems in place to support the investors' interests actively. Part of that system is online tracking software that allows investors to view payment activity, confirm trust deed loan details, and determine the status of their investments at any given time.

By working with a broker that understands the private trust deed market, and contracting with an experienced and highly competent servicing agent, trust deed investments can be a lucrative endeavor. These types of investment typically demand an 8% to 14% annual interest rate, with loan terms ranging from 1 to 20 years. Investment returns will vary based on the type of property, the condition of the asset, location, type of loan, and qualifying factors of the borrower.

With the right team in place and a proper amount of due diligence on each deal, a qualified investor can participate in the trust deed marketplace with confidence that they will achieve positive results.

Wednesday, November 30, 2016

Dodd-Frank is DEAD! God Bless America!

Dodd-Frank is DEAD! God Bless America!

I just spend the past 12 hours in a Continuing Education class discussing the changes that are required for Dodd-Frank/CFPB regulations. And let me tell you it's a massive, madness, unbelievable, un-holey nightmare. We are going to have to hire a full time person just filling out forms so the government can track you even more.

BUT maybe we won't.

Word is now circulating in Washington that a top priority within Team Trump going forward is the swift and decisive dismantling of the disastrous and highly controversial Dodd-Frank Wall Street reform legislation that has resulted in record-breaking bank profits while decimating the small-business and private party loan environment that is doing yet further harm to an already weakened American Middle Class.

The Democrat-sponsored bill greatly favored the richest of the rich who could afford to wade through the monstrous layers of red tape, while crippling smaller banks and businesses who could not do so. The result was further consolidation of the banking industry, less competition, and ultimately, fewer choices to the consumer. Personally, I'm amazed that any small mortgage company is even still in business or making any money.

However, congressional leaders have already been put on notice that within days after Donald Trump is sworn in on January 20th, the new president expects Congress and the White House to move quickly to dismantle the Dodd-Frank boondoggle and bury it deep within the growing trash-bin that was once the Obama legacy.

So how bad is Dodd-Frank?

Let me put it in terms for a Realtor, if the Dodd-Frank rules were applied to a Realtor this is what it would be like in general terms.

1. If you did not get signatures and disclosures to your buyer or seller in a timely manner. - YOUR FINED

2. If you had a typo on your contracts sales/listing - YOUR FINED

3. Total cost to seller for buyer/broker fees cannot ever exceed 3%. That 1.5/1.5 for the split.

4. If the seller/buyer feels that they were treaded un-fairly you will have to give them back your commission and then - YOUR FINED.

5. If any buyer/seller complain to the CFPB you may be audited and will have to pay for the cost of the audit.

6. You will have to collect data on the national origin, sex, status, results, sales, status, time, discussion, and much more on everyone who you talk to about selling/listing a home. Up to 138 different items to collect on everyone. Even if you don't list or sell them a home.

Recently I've realized that God is now answering my prayers.

When you look at the Dodd-Frank measures, its frustrating that this piece of regulation ever came to being. It's equally frustrating that there is no way that I can change the rules and fix the situation. However, I do have an ace in my back pocket that can fix anything and lately this ace is fixing a-lot-of-things in the world. All you have to do is ask. Miracles and answers to prayers do happen and this is all we can do to fight the stupid corrupt people in charge.

Miracle 1 - Cubs win!

Miracle 2 - Cuba is going to become free!

Miracle 3 - Trump Wins!

... and soon to be....

Miracle 4 - Dodd-Frank is killed!

I do believe that God answers payers. So keep praying, because this all we can do. This massive, unbelievable, un-holey nightmare will end.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Tel: (623) 582-4444 | Fax: (888) 279-6917
www.Level4Funding.com
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112
Phoenix AZ 85027

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 an Arizona resident for the past 40 years. They have 2 beautiful daughters 5 amazing grandchildren.

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.

Over 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.

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.

The 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.

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.

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 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.

Learn To Be A Fix & Flip Investor

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The Big Show is Coming to Town.

Wednesday, January 4, 2017

Deed of Trust Definition - What is a Deed of Trust

What is a Deed of Trust?

Tuesday, January 3, 2017

Private Hard Money Lender In Arizona

Trust Deed Investing - How to Invest - Risks and Rewards

The basic components of a trust deed investment are

Wednesday, November 30, 2016

Dodd-Frank is DEAD! God Bless America!

Wednesday, November 23, 2016

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

So what attracts people to trust deed investing?

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

Tuesday, November 22, 2016

What are the parties involved with trust deed investing?

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

In trust deed investing the trust also handles the foreclosure.

Monday, November 21, 2016

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

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

Character is everything when it comes to trust deed investing

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