ABOUT TD INVESTING
INVESTORS: TRUST DEED INVESTING INFORMATION
• Potential borrowers inquire about equity loans against their property.
• All client and property information is carefully screened and processed by Crawford Real Estate Services, Inc.. With property valuations determined by a third party licensed appraiser.
• There are numerous scenarios and reasons for our borrowers to need an equity loan. We do our due diligence in advance that borrowers are able to repay the loan per the applicable terms. Any available cross-collateralization of other real estate is presented and considered, as are liquid and hard assets which may be pledged as collateral for the loan.
• If the loan meets our lending guidelines, we then contact investors to present the details of the loan transaction for their immediate consideration.
• A Crawford Loan is secured by a Note and a Deed of Trust
• A note is a written and negotiable instrument.
• A deed of trust is a recorded document which secures the note. Beneficial interest in the note and deed of trust are sold to private lenders at a fixed rate and term.
• Borrowers make payments to Crawford Real Estate Services, Inc., who then makes direct payments (may include interest and principal) to the investor.
High Fixed Yield – Great return on investment with 10-13% returns, historically beating the Dow Jones average.
Fixed income – A trust deed investment is considered to be a fixed income security, with fixed yields from 10-13%. Trust Deeds secured by tangible real property, when professionally underwritten and managed, have become a good investment alternative for the income producing portion of an investment portfolio.
Diversification – Trust deed investing offers many investors, particularly retirees, another method of diversification to help reduce volatility in their portfolio and a way to generate additional income.
Security – trust deeds secured by California real estate
Stability – Interest remains constant throughout the term of the loan.
Low Cost – Servicing fees range from 1% to 1.25% annualized, calculated on the unpaid principle balance.
Predictability – Most fixed-income investments also provide a predictable stream of income. This can be an advantage for current or near retirees who seek regular income to supplement a pension and/or Social Security.
Tax Advantage – The interest income generated by some fixed income investments are tax deferred or tax exempt from federal and/or state income taxes. This includes investing your IRA or pension funds in trust deeds.
Trust Deeds CDs Stocks Municipal Bonds
Interest 10-13% 1-4% Variable 4-5%
Risk Low-Moderate Low High Low-Moderate
Secured by Real Estate FDIC Paper Municipalities
Liquidity Fixed Term Yes with penalty Yes Yes
Commission None None Always Always
Trust Deeds have the highest return on investment with a relatively low risk.
Your Trust Deeds are secured strictly by Real Estate
ABOUT TD INVESTING
Investing in Trust Deeds is a way for private individuals to deploy funds in an secured instrument with real property collateral as its security. These investments normally yield a higher than market return to its investors versus traditional market investments.
Investors can invest in a multitude of Financial environments including Personally, Individual Retirement Accounts (IRA’s), Family Trust ‘s, Pension Plans, 401K’s, Pension Plans, Corporations, Partnerships etc
“Trust Deed ” is short for “Deed of Trust”. A Deed of Trust is a document that is the security instrument that is recorded against a piece of real property that secures a Promissory Note or “Contract to pay” which details the agreement, rights, and responsibilities of all involved in the loan being made between all parties.
There are three parties involved in a Deed of Trust:
The “Trustor(s)” or Borrower(s)” – The person(s) or entity that owns the real property being pledged for Collateral
The “Beneficiary(s)” or Lender(s) – the person(s) or entity that is the actual “Investor” lending the money
The “Trustee” – the person or entity that acts as a third party intermediary who is responsible for overseeing the disposition of the secured instrument.
A “Promissory Note” details the contract of repayment and the rights and responsibilities of both the Borrower and Lender.
A Deed of Trust is the security instrument that secures the Promissory Note against the real property and details the rights and responsibility of both parties as to the protections and collection of the debt. The security instrument is a evidence of debt or a pledge of the real property asset. It details the right to collect and remedy in which the debt is to be collected.
California is a “Trustee’s State”…. Collection of Debt is accomplished through a foreclosure action which is also called a “Trustee’s Sale”or through a “Judicial Proceeding” against the borrowing entity to obtain a monetary judgment that can be enforced against real property and other assets.
California has a “One Action Rule” to enforce the collection of debt. This gives the investor options in the event of a default to best collect the debt but only allows one remedy
California is a “Rush to the county recorder State”. This means that the right or priority of a secured or recorded lien is based on the time and date it is recorded against the real property. Liens can be voluntary or involuntary depending on their nature and also can be prioritized based on written agreement.
How to Safely Invest in Real Estate Trust Deeds
Real Estate Trust deeds are simply loans made out to borrowers against a real estate property. In this case, borrowers are individuals who can’t access alternative capital mainly because banks are not lending to speculative real estate investors. As an investment, speculative real estate can offer high returns in a relatively short time. Ideally, a real estate investor borrows funds which he or she uses to buy and fix up real estate from the trust deed investor. The real estate professional then sells the property for a profit and pays back the loan and interest. In the period of the loan, the property is the security. Unfortunately, the real estate market is quite unpredictable and sometimes the investment doesn’t sell. Consequently, the trust deed investor faces the possibility of losing money. Below, we look at tips on how to avoid losing funds in trust deed investing.
Get Maximum Title Insurance as a Lender
A title insurance policy might sound like an unnecessary expense for a lender but a title policy can protect the lender’s interest especially if he needs to sell the loan in the secondary market. Getting title insurance is also an ingenious way of having someone else verify the integrity of a property’s documents for you. This is because the insurance company will conduct an extensive research on the property before selling you a policy. If they find any problems, they will not sell you the policy. You will in turn avoid a bad deal.
Inspect the Property and Its Documents Personally
Before lending any money, go out and physically inspect the property against which the loan is being taken out. This way you will be in a good position to assess the risk involved. It helps to have professionals in real estate and construction businesses accompany you to the inspection because they will help evaluating the property’s worth.
After the physical inspection proceed to take a look at the documents. Properties that are owned by families and partnerships present higher risk that those owned by individuals. If you are uncertain about any document, do not hesitate to call a lawyer for advice.
Diversification helps spread risk and reduces your exposure. In trust deed investments, you can diversify by buying in on a deal structured in a way that you don’t provide the whole amount for the loan. This means that each party will risk only a small amount. The returns on each single deal might be low but when you compound that with many small deals you end up with a relatively low risk investment portfolio.
These tips should set you on your way to safe trust deed investing. When you know what you are doing, this is one of those investment vehicles that a relatively small investor can take advantage of since the “big boys” of Wall Street are not particularly interested in this type of investment, since it is not scalable. That being said, it’s always best to choose an investment vehicle that you feel you understand well.
You may also contact us at any time to talk to one of our specialists about potential investment opportunities.