Advice about trust deed investment

[Nachoman]

A year and a half ago, I entered into a trust deed investment for a set of 4 townhouses that were being built by some friends. Unfortunately, now that the market is in the tank, the “due date” is coming up and the houses have not sold.

Obviously I made a bunch of mistakes… First mistake, I invested in the housing market at its peak, since I found Pigs I won’t make that mistake again. Second mistake, I invested in a project run by some friends… lesson learned not to mix friendship with business.

Now that the due date is coming up and in all likelyhood I won’t see my investment back on that date, what steps do I need to go through to protect myself? Is there any way I’m going to see that money back?

[EconProf]

I was in your position a while back, and unfortunately, lost a great deal of money in the deal. And I saw the bursting bubble coming too. Couldn’t get the builder to keep on the construction schedule, so we missed the top of the market. Had he been on time, we’d have made out fine.
If you have a second TD behind a construction loan, you are really in a bad position. Depending on the numbers, you could lose it all. I salvaged some, but it took a good lawyer, a big infusion of more cash, and a lot of sleepness nights.

[EconProf]

I was in your position a while back, and unfortunately, lost a great deal of money in the deal. And I saw the bursting bubble coming too. Couldn’t get the builder to keep on the construction schedule, so we missed the top of the market. Had he been on time, we’d have made out fine.
If you have a second TD behind a construction loan, you are really in a bad position. Depending on the numbers, you could lose it all. I salvaged some, but it took a good lawyer, a big infusion of more cash, and a lot of sleepness nights.

[EconProf]

I was in your position a while back, and unfortunately, lost a great deal of money in the deal. And I saw the bursting bubble coming too. Couldn’t get the builder to keep on the construction schedule, so we missed the top of the market. Had he been on time, we’d have made out fine.
If you have a second TD behind a construction loan, you are really in a bad position. Depending on the numbers, you could lose it all. I salvaged some, but it took a good lawyer, a big infusion of more cash, and a lot of sleepness nights.

[EconProf]

I was in your position a while back, and unfortunately, lost a great deal of money in the deal. And I saw the bursting bubble coming too. Couldn’t get the builder to keep on the construction schedule, so we missed the top of the market. Had he been on time, we’d have made out fine.
If you have a second TD behind a construction loan, you are really in a bad position. Depending on the numbers, you could lose it all. I salvaged some, but it took a good lawyer, a big infusion of more cash, and a lot of sleepness nights.

[EconProf]

I was in your position a while back, and unfortunately, lost a great deal of money in the deal. And I saw the bursting bubble coming too. Couldn’t get the builder to keep on the construction schedule, so we missed the top of the market. Had he been on time, we’d have made out fine.
If you have a second TD behind a construction loan, you are really in a bad position. Depending on the numbers, you could lose it all. I salvaged some, but it took a good lawyer, a big infusion of more cash, and a lot of sleepness nights.

[Nachoman]

That’s too bad, unfortunately I am second in line. And also they don’t have much left, the housing bust really socked them hard, so suing would be like trying to milk a dried well.

[Nachoman]

That’s too bad, unfortunately I am second in line. And also they don’t have much left, the housing bust really socked them hard, so suing would be like trying to milk a dried well.

[Nachoman]

That’s too bad, unfortunately I am second in line. And also they don’t have much left, the housing bust really socked them hard, so suing would be like trying to milk a dried well.

[Nachoman]

That’s too bad, unfortunately I am second in line. And also they don’t have much left, the housing bust really socked them hard, so suing would be like trying to milk a dried well.

[Nachoman]

That’s too bad, unfortunately I am second in line. And also they don’t have much left, the housing bust really socked them hard, so suing would be like trying to milk a dried well.

[EconProf]

Here is the brutal calculation you have to make:

What is the true, after expenses, value of the property, if sold? Be sure to include all the expenses–they are probably larger than you think.
What will be the 1st & 2d debt owed, as of the date of the last unit sold?
If there is anything left over, that is what is kept.

In my case I could see the builder was going to make less than zero. Therefore he had no incentive to continue. But I could see that if could buy out the bank construction lender, I could sell the remaining units and lessen my loss. It was a nightmare but I did it with the help of a great lawyer. The bankers were turds–they knew I was the bag-holder. But sometimes you must salvage what you can from the situation

[EconProf]

Here is the brutal calculation you have to make:

What is the true, after expenses, value of the property, if sold? Be sure to include all the expenses–they are probably larger than you think.
What will be the 1st & 2d debt owed, as of the date of the last unit sold?
If there is anything left over, that is what is kept.

In my case I could see the builder was going to make less than zero. Therefore he had no incentive to continue. But I could see that if could buy out the bank construction lender, I could sell the remaining units and lessen my loss. It was a nightmare but I did it with the help of a great lawyer. The bankers were turds–they knew I was the bag-holder. But sometimes you must salvage what you can from the situation

[EconProf]

Here is the brutal calculation you have to make:

What is the true, after expenses, value of the property, if sold? Be sure to include all the expenses–they are probably larger than you think.
What will be the 1st & 2d debt owed, as of the date of the last unit sold?
If there is anything left over, that is what is kept.

In my case I could see the builder was going to make less than zero. Therefore he had no incentive to continue. But I could see that if could buy out the bank construction lender, I could sell the remaining units and lessen my loss. It was a nightmare but I did it with the help of a great lawyer. The bankers were turds–they knew I was the bag-holder. But sometimes you must salvage what you can from the situation

[EconProf]

Here is the brutal calculation you have to make:

What is the true, after expenses, value of the property, if sold? Be sure to include all the expenses–they are probably larger than you think.
What will be the 1st & 2d debt owed, as of the date of the last unit sold?
If there is anything left over, that is what is kept.

In my case I could see the builder was going to make less than zero. Therefore he had no incentive to continue. But I could see that if could buy out the bank construction lender, I could sell the remaining units and lessen my loss. It was a nightmare but I did it with the help of a great lawyer. The bankers were turds–they knew I was the bag-holder. But sometimes you must salvage what you can from the situation

[Author]

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