TRUST DEED / PRIVATE MORTGAGE INVESTMENTS
Trust deed/private mortgage investing is investing in loans backed by real estate. In most cases, trust deed/private mortgage investments are short-term loans that mature in less than 5 years, with most loans maturing in 6 months to two years. These loans are made to professional real estate investors who may need financing to fix and flip properties, purchase rental properties or rehab existing properties. Many investors are buying distressed properties at a discounted price to rehab and resell for a sizable profit.
Banks have long been reluctant to lend to this market, particularly since the recession, because they have a large amount of bad real estate loans on their books as a result of loose lending over the last decade. Banks are very hesitant to make real estate loans that do not fit into a set of strict criteria, which typically requires the property that serves as collateral be in move-in ready condition. Because real estate investors have limited funding options, lenders in this market may charge somewhat higher interest rates.
Banks have long been reluctant to lend to this market, particularly since the recession, because they have a large amount of bad real estate loans on their books as a result of loose lending over the last decade. Banks are very hesitant to make real estate loans that do not fit into a set of strict criteria, which typically requires the property that serves as collateral be in move-in ready condition. Because real estate investors have limited funding options, lenders in this market may charge somewhat higher interest rates.
Why Turn to Trust Deed / Private Mortgage Investing?
When structured properly, this form of investment offers a great yield with relatively low risk to investors. Most trust deed/private mortgage investors earn high single-digit annual returns that are paid monthly, although returns of more than 10% are certainly possible.
If a borrower fails to pay their loan, the trust deed/private mortgage investor is protected by the margin of safety, or the difference between the loan amount and the value of the property, also known as protective equity. The lender can foreclose on the property and sell it to recover the investment and past-due interest. This is why it is important to make conservative loans, typically with a maximum loan-to-value of 65-70%. Because hard money loans are short-term, usually for two years or less, real estate values are unlikely to change dramatically before the loan is due.
Your money will be protected, as you will be recorded as the lien holder, and you will hold first lien position. This means you will be first to be paid if the borrower defaults. Vision Global Capital also requires C-ALTA title insurance, hazard and homeowner insurance, and that the borrowers contribute at least 15% of the total project cost before a loan is made.
When structured properly, this form of investment offers a great yield with relatively low risk to investors. Most trust deed/private mortgage investors earn high single-digit annual returns that are paid monthly, although returns of more than 10% are certainly possible.
If a borrower fails to pay their loan, the trust deed/private mortgage investor is protected by the margin of safety, or the difference between the loan amount and the value of the property, also known as protective equity. The lender can foreclose on the property and sell it to recover the investment and past-due interest. This is why it is important to make conservative loans, typically with a maximum loan-to-value of 65-70%. Because hard money loans are short-term, usually for two years or less, real estate values are unlikely to change dramatically before the loan is due.
Your money will be protected, as you will be recorded as the lien holder, and you will hold first lien position. This means you will be first to be paid if the borrower defaults. Vision Global Capital also requires C-ALTA title insurance, hazard and homeowner insurance, and that the borrowers contribute at least 15% of the total project cost before a loan is made.
Investing in Trust Deeds / Private Mortgages With Vision Global Capital
There are many ways to invest in trust deeds/private mortgages, including personally sourcing loans and lending money directly to investors or investing in a fund that invests with trust deeds/private mortgages. Most trust deed/private mortgage investors rely on brokers like Vision Global Capital to present them with the best opportunities and perform the due diligence on loans. Whether you want to invest just $10,000 or more than $100,000, we will help you grow your investment as safely as possible.
There are many ways to invest in trust deeds/private mortgages, including personally sourcing loans and lending money directly to investors or investing in a fund that invests with trust deeds/private mortgages. Most trust deed/private mortgage investors rely on brokers like Vision Global Capital to present them with the best opportunities and perform the due diligence on loans. Whether you want to invest just $10,000 or more than $100,000, we will help you grow your investment as safely as possible.
