As a full-service hard money lender, we also work with trust deed investors who are interested in taking advantage of the incredible upside potential that investing in real estate offers. While investing in the real estate is one option available to you, trust deed investing is another option. We strive to provide our investors with the information and options they need to make a sound investment decision. Our investors can earn up to 10 percent or more annualized yield and receive monthly income interest payments.
A Trust Deed is a document recorded with a county recorders office creating a secured lien on real property, which provides collateral for lenders and trust deed holders.
A borrower who owns or wants to own real estate needs a loan. The borrower executes a Promissory Note wherein the borrower promises to repay the lender. The recorded Trust Deed creates the secured interest attached to the borrowers real property. If the borrower does not pay as promised, the Lender/Trust Deed Investor can look to the real property for repayment and/or recovery of their invested capital.
A Trust Deed investment occurs when an investor purchases all or part of the Note and Deed of Trust. The Investor can earn a 10% +/- annualized yield and receives monthly interest payments.
There are many reasons borrowers request private money loans. A few include:
Fast loans
Short term (1 to 5 year) loans
Minor credit problems
To pay judgments and liens such as Federal or State taxes
Property may have some problems that make it difficult to obtain a bank loan
There are many reasons borrowers request private money loans. A few include:
The difference between a First and Second Trust Deed is the priority of the lien based on the date the Trust Deed is recorded. If you have a Second Trust Deed and the Borrower fails to pay the First, you would be responsible to make the First Trust Deed payments or suffer the risk of being foreclosed out and losing your invested capital.
The LTV or Loan to value ratio is the ratio between the mortgage loan and the value of the real estate, pledged as security, which is expressed as a percentage. This is referred to as the Loan-to-Value Ratio:
LOAN = $500,000
VALUE = $800,000
LTV = 62.5%
This means that the loan, expressed as a percentage of the property is 62.5%. The higher the loan-to-value ratio, the greater the lending risk because the protective equity declines as the LTV increases.
Example: A single-family home with 4 bedrooms and 2 ½ baths is valued at $425,000. If we are making a 70% LTV, the loan is $297,500. ($425,000 X .70 = $297,500) The difference between the value of the property and the loan is $127,500. This is referred to as protective equity or equity cushion.
Part of our initial underwriting is to determine the borrowers exit or payoff strategy. Generally, the borrower will sell the property and pay off the loan with the sale proceeds, refinance with another Lender, or extend the loan with us.
In order for you to make an informed decision, you should require the following in your package:
Loan Summary of the Trust Deed Investment
Loan Application of the borrower
Credit Report of the borrower
Appraisal from independent, certified appraiser with original photographs and area location map
Borrower Escrow Instructions, Promissory Note and Deed of Trust
If your loan will be in second position, a copy of the first position Promissory Note and Deed of Trust.
Current Preliminary Title Report issued by the title insurer.
Crawford Park Financial can act as the Loan Servicing Agent for loans that we offer to Investors. We handle everything from communicating with the borrowers to collecting the payments via a third party regional servicer.
When you are ready to invest, call Crawford Park Financial. Let us know the way that you take title to your investments and how much you are prepared to invest. You may hold title as an individual, family trust, partnership, corporation, a corporate pension plan, IRA, etc.
Discloser:
This information is intended for experienced California Real Estate Investors. Not every investor is suitable to invest in apartment syndications. Qualified California Investors are required to possess either a net worth of $500,000 (exclusive of home, furnishing, and automobiles) or income greater than $65,000 and a net worth greater than $250,000 (exclusive of home, furnishings, and automobiles). Additionally, not more than 10% of an investor’s total net worth may be invested in any single investment. Investments are not insured, guaranteed, transferable or liquid and involve risk and possible loss of principle. Nothing on this website constitutes an offer to sell or solicitation of an investment offer.
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