When most people think of hard money lenders, including real estate agents, conventional mortgage brokers, escrow and title officers, they mostly think of an individual investor who funds a few loans per year or a local hard money lending company that funds fix and flip transactions. The reality is that the industry has expanded significantly beyond local lenders to nationwide hard money lenders originating loans and selling to pension funds and Wall Street investors, which has led to greater loan product offerings for the end user, the real estate investor.
Current updates on the real estate market, private money, hard money, and trust deed investing.
Trust Deed Investing
If you are a seasoned investor, you have probably heard about hard money loans and trust deed investing. Maybe you have friends who have diversified their investment portfolio by loaning money out to real estate investors on a project. Or, maybe you personally have borrowed from a hard money lender on one of your real estate projects and “being the bank” caught your attention, so here you are wanting to learn more about how you can do the same thing with your capital.
A little while back, I had a conversation with a friend rolling $250,000 from their 401K into an IRA after leaving the company they’d worked at for eleven years. The friend was asking me about setting up a Self-Directed IRA for trust deed investing, lending the money out at 9.00-10.00% compared to simply rolling their retirement money into a Roth IRA with Vanguard.
If you’re an investor and want to get a good idea of the types of loans that FCTD originates with private beneficiaries like yourself, this Best of Trust Deed Investments blog will give you a good idea of our terms so you can see if we'd be a good fit or not be a good fit for you.
There are many pros and cons of trust deed investing. It could be the right move for you, especially if you want to seek out alternative investment opportunities in addition to stocks, bonds, and real estate. It could also be the wrong investment for you if the disadvantages outweigh the advantages for you and your investment goals.
First Capital Trust Deeds originates loans with trust deed investors a few different ways. Most private money loans are funded by a single trust deed investor for entire loan amount. However, another way to fund trust deed investments is with multi-lender loans, or fractional loans, where two or more investors, or private beneficiaries, fund the loan.
If you’re researching trust deed investments or looking for new mortgage brokers to fund or buy existing Notes from, you’ll want to know if the rate of return matches your investment goals. The last thing you want is to be a low-leverage, lower return investor repeatedly being offered high-leverage, higher yielding paper that could lead to problems and headaches down the road.
If you’re in the research phase of trust deed investing, you are probably looking online, talking to mortgage brokers and to friends who have experience funding private money loans. There is a lot of information available about the Note, Deed of Trust, and Security Instrument. However, there’s not much information about the real-life problems that arise with trust deed investments.
First Capital Trust Deeds is a California-based mortgage broker specializing in mortgages for real estate investors, including Private Money, NonQM, Conventional, and Bank Portfolio programs. FCTD holds broker and/or lender licenses in five states:
Like most of First Capital Trust Deed’s current trust deed investors, you have funded private money loans in the past and are familiar with how the process works. Maybe you’ve worked with other private money mortgage brokers over the years and working with FCTD is new for you.