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Diversify with Deeds of Trust
Selling Deeded Property
One of the greatest risks associated with Deeds of Trust is the lack of liquidity. If you want or need your money, you could face a real challenge if you are unable to sell your note. What if your property decreases in value and the Trustor defaults? What if the bidder at a public auction will not pay as much as your debt totals? In that instance, consider a judicial foreclosure coupled with an action for deficiency judgment.
Loan-to-Value Ratio
Another way to recoup your investment is to reduce the loan-to-value ratio. For example, agree to loan up to 60 percent or 70 percent of the property value rather than a larger percentage. A public auction would more than likely recover sufficient funds to repay you, and the borrower would have a larger stake in the property. This increases your chances of finding a credit-worthy trustor.
Professional Help
Bottom Line: Protect your investment--work with a competent loan broker or real estate agent to help you make or buy a loan.
See What Jeff Says About:
• Deed of Trust vs. Mortgage
• back to intro
Resources
- Second Deeds of Trust: How to Make Money Safely, by David J. Crabtree, Loan Broker and Barney G. Glaser, Investor
This page on the Grounded Theory Institute Web site lists an outline of the book's contents.
Note I have never read it--this is not to be considered an endorsement for the book. - Brad Evans Real Estate Loans
This Web site includes a section on Trust Deed Investment. You'll have to scroll down a bit to get to that section. There is also a special page for beginners. - America's Note Network
This site claims to be the largest subscription-based service on the Internet for discounted trust deeds, mortgages, etc.
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