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.

The market is fickle but trust deed investing is not as scary as you thought.

Sometimes your plans will fall through and you have to deal with the consequences. In business, nothing is guaranteed. This goes double for the real estate business. Trust deed investing, when done correctly, can be lucrative when done safely and correctly. That said, there are hundreds of unforeseeable variables that can cause loss, as well as, tremendous success.

One of the best classes that entrepreneurs in this market could benefit from is philosophy. The primary focus, in the opinion of this writer, should be on stoicism. Not the whole dreary outlook on life thing, that is extremely depressing. Stoics may have gotten some things wrong, but the thing they got right is coming to terms that you cannot control the outcome of anything, and you should not be upset over that.

Trust deed investing can allow you to make a solid profit if you are able to read the market well. That being said, the market constantly changes. One year you could be receiving loan payments on a beautiful property with positive capital appreciation. The next year you could have what seems like a never-ending dry spell with no luck. But, alas, everything will be okay.

This happens all too often in the commercial real estate world. We are still living in the wake of one of the worst recessions in the United States. But, eight years later the housing market is making a strong comeback.

What makes trust deed investing a safe option for you?

One of the best things that trust deed investing provides you with a certain level of safety wen you are thinking of taking on. If you plan on borrowing money for your investment the loans that you take out are short-term. If you do your due-diligence and research you will not have to worry about the strength of your loan.

Short-term is key when you are investing. Usually, you will be able to recoup your investment within two to three years. With trust deeds, you typically are able to get a 9%-12% annualized return.

Being a lender has great perks. If something were to happen you most likely will still be covered for the loan that you approved. For example, for new homeowners are required to purchase insurance for their property. Stuff you already know, however, in regard to trust deed investing your name, as the lender, is on the policy. This means that even if the something were to happen that was covered in the policy, the lender would still be able to receive regular payments; even if the value decreases.

“So I don’t need to worry about trust deed investing too much do I?”

No, that is not what we are saying. You should always do your research when you are taking on any investment, especially when it comes to trust deed investing. As stated previously, there are many different variables that need to be taken into consideration. Could you potentially lose money? Yes, that could happen. Could you make a very nice return on your investment? Absolutely, but as the armed forces say, you need to keep your head on a swivel. Make sure you check the details always.

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.

California real estate investors beware: Common issues with trust deed investing

When you are investing in commercial real estate risk and reward are words to live by. You have to be able to roll with whatever the market throws at you. Trust deed investing is no different, there will be ups and downs that you have to face. This brief will shed light on some things you may encounter.

Real estate can be a tumultuous and tiresome profession if you let it. The market consistently goes through a feast and famine period. There could be a time when you have revenue coming in from multiple ventures. There could also be times when you have to claw and gnash for a small investment. It is enough to make you not want to be in the industry.

Trust deed investing is not without its faults, however, there are still some cons that you will have to face. One thing that you need to keep in mind is the margin of safety. Basically, the margin of safety is the difference between the loan amount and the actual value of the property that you are investing in. For example, the value of a home that you are looking at has a low value and your loan is relatively high you may run into issues you were to default.

Many investors face complications when they misjudge the market and the margin of safety associated with it. The property that you had high hopes for is in foreclosure because no one could be convinced that this was a good investment. Now you, as the owner of the deed of trust, have to take on sole responsibility for repayment of the loan until the lender can sell it. Trust deed investing can sneak up on you if you are not careful.

One of the biggest drawbacks that trust deed investing poses is it not being FDIC insured. For example, if you were to go to your local bank and get a loan for a home that you are interested most likely you would be able to have the loan insured by the FDIC. In regard to trust deeds, however, the safety of your investment relies solely on the value of the property that you are trying to turn a profit.

You have a lot more work that needs to be done before taking on trust deed investing.

We have said before that for you to be successful in the commercial real estate business paying attention to the details is paramount. Trust deed investing comes with confusing documentation just like the rest. The deed of trust, along with all documents should be double and triple checked to make sure that there are no errors. In some cases, the borrower you are lending to could have ample right to sue you for having invalid documentation. This will end up costing more money in the end.

In rare cases, if you are not diligent in you bookkeeping you could be stuck footing the bill of the investment. Depending on the market and value of the investment it could be months that you would wait to see your money again.

There is no guarantee with trust deed investing.

With trust deed investing the capital appreciation could be very low if you are not careful, as well. When if you are lending someone a loan for an investment most of the time the profit that you will receive will most likely come from the interest the will incur on said loan.

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.

The Real Deal with Trust Deed Investing

When you are investing it is paramount that you have many different options to make the most out of your capital. Trust deed investing is a great way to build multiple relationships while bringing in great business. This brief article will show you the basics.

First and foremost, what is trust deed investing? Trust deed investing is defined by the investor having their name on the deed of trust for a property. So what do you, as the investor need to do to be successful in trust deed investing? Research is the biggest thing that needs to take place before you do anything.

Why is this the best option for you? What are your other options in regard to investing in a property? What makes this a better option in lieu of hard money investing? Trust deed investing basically allows you to invest in a loan that is backed by real estate. Most of the time these types of loans only last for about five years. Usually, there is a promissory note that states the intent to pay back the money owed. Some can be paid off in as little as two years. Typically the interest of the loan that is issued is around 7 to 12 percent.

If you are trying to invest in California there is a document, called the deed of trust, that verifies the owner of the property. This is useful when payments are not being made to the lender. Once everything is varied the deed of trust becomes public record. When you are considering trust deed investing any form of payment is accepted for the loan that you are applying for.

Why would trust deed investing be the right choice for you?

So why should you consider trust deed investing? If you are borrowing, trust deed investing challenges you to find the highest quality real estate as possible. This means you have to do your due diligence when looking for the right property. If you are looking into buying a home it should be one that you can see making a profit fairly quickly. This pushes you to make better decisions when you are looking for a potential investment. If you are lending the funds for the investment, trust deed investing gives you the power to foreclose on the property to recoup your money.

When you take this type of investment there is more transparency as well. For example, when you are applying for a loan depending on the value of the property that you are trying to resell determines your loan. Lenders also have a lot more control over what happens is the borrower were to default on the loan.

So will you make any money in trust deed investing?

Short answer yes you will. But with all commercial real estate investing there are certain things that you have to look out for. In some cases, it may be better for you to apply for a traditional bank loan or a hard money loan from a reputable lender. Always way your pros and cons when attempting any type of investments.

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.

Beware Of The Dangers Involved In Investing In Private Hard Money In California

We all wish we had more money than we do. We may not need it now, but we would feel better knowing we will have it later when we need it. So we invest. We try to take our money and turn it into more money by investing in something we hope will be profitable.

Of course, when you invest in a project, there is a chance that the project will fail and you will lose money. This goes for any project, but some will come with more or less risk than others. Often, those with more risk come with greater rewards. While making more money can be appealing, there is more of a chance you’ll lose it all.

There is a risk-reward aspect to every investment, but for those that get involved in private hard money in California, there is a little more risk involved than just whether the project fails.

Beware The Risk Of Outside Influences

Just getting a business to succeed on its own is challenging enough, but having to deal with how outside influences can affect the success of your venture can be maddening. For example, let’s say you invest in a company that claims it is going to revolutionize the hybrid car industry. You throw everything you have into it because everyone will want a hybrid car when they become more affordable.

But then OPEC decides to release millions of barrels of oil and the cost of gasoline plummets. While it may be nice for the environment, people are more concerned with cheaper travel—and your investment is dead in the water.

With private hard money in California or anywhere else, the risk is similar but more involved. Not only do you have to deal with factors that are related to your venture, but you have to deal with those related to the equity people use to secure their loans.

Let’s say they use a few rental properties (houses) as collateral to secure a loan to be used to acquire an apartment building. But then the housing market crashes. You would think apartments would do fine since people still need a place to live, but what if its location is poor and it isn’t filling up fast enough?

Without rental income coming in, the borrower has trouble making payments. They default, and the lender takes possession, but since the loan for the apartment building was secured with a few houses. With the crash, the value of those homes has dropped significantly—and whoever invested in the loan for the apartment building is screwed.

Greater Risk Equals Greater Reward With Private Hard Money in California

Market crashes have wreaked havoc among lenders in the past and very well could in the future if all parties involved are not careful. So how can investors protect against it? Well—it’s kind of hard to. They just have to be aware of the state of the market as much as possible and pull out before the crash gets bad (if they can).

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.

How To Be Successful When Borrowing Private Hard Money In California

Borrowing private hard money in California and anywhere else is supposed to be easier than getting approved for a traditional loan, but it is still possible to screw it up. The following tips will help keep you from doing so.

In a perfect world, people would not need to borrow private hard money in California. People would have excellent credit ratings and more than enough income history to get approved by traditional lenders. But the world is far from perfect. Most of us do not have good credit ratings and don’t have the kind of income history traditional lenders like to see.

So it’s a good thing private hard money lenders exist to give people another option.

Tips To Getting Approved For A Private Hard Money Loan

Private hard money in California is supposed to be easier to get approval for, but that does not mean that just about anyone that applies will get approved. It’s just as easy to screw up a private hard money loan application as it is a traditional bank loan.

The following tips will help keep your application from getting rejected:

• Don’t hide anything. One of the quickest ways to make sure your application is denied is for the lender to discover something that paints your application in a negative light from a source other than the borrower. So be up-front and tell them anything and everything they want to know-- even if it’s bad. At least if they find out from you, you only have to answer for it and not for why you tried to hide it as well.

• Don’t be pushy. A private hard money loan is going to be approved faster than a traditional loan jut by the nature of the process alone. Following up (which is a good thing) too often or in too aggressive a manner will not help your cause.

• Don’t make claims you can’t backup. The lender is going to do its due diligence. Lofty goals are nice to shoot for, but your lender is going to want to see that you can keep expectations realistic.

• Do what you say you are going to do. Lenders and investors need to believe in you. Lie, act in a dishonest manner or fail to follow through on something and your integrity will come into question.

• Don’t shop around too much. Doing so will eventually get lenders wondering if there is something wrong and if they should trust you.

• Seek out an experienced, local lender. A qualified lender is going to have a track record of success you can verify and possibly even some insight that can help you out in the long run. A local one is going to be more apt to fund you since they are invested in the community and will like seeing their money at work.

The One Rule You Must Remember

When seeking private hard money in California keep in mind one thing—there are rules, and then there aren’t rules. While there are regulations involved in hard money lending, it is also private. So while there are rules to follow, since the lender is a private entity they essentially make up their own rules. Be aware of them, be flexible, and be ready to adjust, if necessary.

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.