Trust Deed investing is the lending of money with real estate as collateral, usually to real estate investors who are looking to “Fix and Flip” a property. In California, most loans against real estate are called “Trust Deeds,” after the name of the legal instrument used to pledge their security.
Investors at Palm Desert Capital can regularly expect a 7-12% return on a short-term investment that requires little or no effort on their part.
Investing In Real Estate Made Simple
With expert guidance from Palm Desert Capital, anyone can successfully invest in trust deeds. Our team of highly accomplished real estate professionals makes it as stress-free as possible. We have team members with over 20 years experience in mortgage lending, licensed appraisers, and a staff of attorneys with over 30 years of legal experience. This expertise protects your money.
Unlike most other investments where extensive study and years of experience may be necessary before you can invest with confidence, trust deeds are safer than most other investments of comparable yield because the risks are identifiable. Retirees especially enjoy the relatively minor effort needed to manage the investment once their money is in place.
Who Invests In Trust Deeds?
The typical trust deed investor is a person looking for a competitive return on their investment. The interest rate the borrower pays is generally higher than the borrower would pay at a bank. Therefore, the investor receives a higher return on his investment. Even better: the loaned money is secured by the borrower’s equity in their real estate. The security, the good return, and the monthly cash flow make trust deeds an excellent investment vehicle.
Palm Desert Capital receives calls every day from borrowers, realtors, and mortgage professionals who are looking to borrow private money for a real estate transaction. It’s our job to fund loans with investors’ capital. After the loan is funded, it services the note, collecting the payment each month and sending the investors a check.
Most of PDC’s properties are in the Southern California area; that way, before any money is lent, PDC will physically see the property, interview the borrowers, and have a licensed real estate appraiser do an appraisal to ensure the property’s value. That way, the investor places his/her capital in a property that they have personally viewed.
Why Is Trust Deed Investing Safe With Palm Desert Capital?
The basic premise of safe trust deed investing is to make sure that the property (collateral) is sufficient in case the borrower doesn’t make their payment, and we have to foreclose on the property. Palm Desert Capital’s motto is, “We only loan on something we would want to own.”
Consequently, there is a healthy safety net: the loans are only in first position with a lot of equity. So with the low loan-to-value, Palm Desert Capital can help the investor get all their money back plus interest. “Loan-to-value” is simply the loan amount divided by the value of the property. For example, a client calls and needs a loan for $150,000 on a property valued at $300,000. In this scenario, the loan-to-value is 50%. This means that if the borrower were to default on their payment, there would be approximately $130,000 left over (Back payments to the investor would be added to the pay off). Palm Desert Capital lends up to 60% loan-to-value.
Trust deed investing is attractive to both new and experienced investors because it’s backed by real estate.