Investing in Trust Deeds (Mortgage Notes) and LLPs

[34f3f3f]

Not at all. This was one of the more on-topic highjacks, and thanks for the insight to boot. The picture I am building from you and EconProf is be wary, but not altogether deterred. EconProf, thanks for the historical background stuff.

The ebook I mention above does a good job of covering most of the obvious questions, but I’m not totally convinced by explanations as to why anyone would borrow at such high rates. For example, it may be that quick loans are part of what happens ‘out there’, but that doesn’t give the investor much time for due diligence.

For anyone else interested, Cal State website offers a PDF download called “Trust Deed Investments. What you should know.” Skimpy on details but a good starting place. http://www.dre.ca.gov/pdf_docs/forms/re869.pdf

[briansd1]

For some perspective look at Trust Deed from the peak.

Original value $20 million.
Someone reported the property sold for $6.1 million.

http://www.sdlookup.com/Portals/0/NTForums_Attach/mi%20arbolito.pdf
http://www.sdlookup.com/Forums/RegionsandNeighborhoods/tabid/62/forumid/186/tpage/9/view/Topic/postid/14635/Default.aspx

It’s interesting that the people who brokered the deal currently have no available trust deed.
http://www.pointcenter.com/Investor/AvailableTrustDeeds.aspx

[briansd1]

For some perspective look at Trust Deed from the peak.

Original value $20 million.
Someone reported the property sold for $6.1 million.

http://www.sdlookup.com/Portals/0/NTForums_Attach/mi%20arbolito.pdf
http://www.sdlookup.com/Forums/RegionsandNeighborhoods/tabid/62/forumid/186/tpage/9/view/Topic/postid/14635/Default.aspx

It’s interesting that the people who brokered the deal currently have no available trust deed.
http://www.pointcenter.com/Investor/AvailableTrustDeeds.aspx

[briansd1]

For some perspective look at Trust Deed from the peak.

Original value $20 million.
Someone reported the property sold for $6.1 million.

http://www.sdlookup.com/Portals/0/NTForums_Attach/mi%20arbolito.pdf
http://www.sdlookup.com/Forums/RegionsandNeighborhoods/tabid/62/forumid/186/tpage/9/view/Topic/postid/14635/Default.aspx

It’s interesting that the people who brokered the deal currently have no available trust deed.
http://www.pointcenter.com/Investor/AvailableTrustDeeds.aspx

[briansd1]

For some perspective look at Trust Deed from the peak.

Original value $20 million.
Someone reported the property sold for $6.1 million.

http://www.sdlookup.com/Portals/0/NTForums_Attach/mi%20arbolito.pdf
http://www.sdlookup.com/Forums/RegionsandNeighborhoods/tabid/62/forumid/186/tpage/9/view/Topic/postid/14635/Default.aspx

It’s interesting that the people who brokered the deal currently have no available trust deed.
http://www.pointcenter.com/Investor/AvailableTrustDeeds.aspx

[briansd1]

For some perspective look at Trust Deed from the peak.

Original value $20 million.
Someone reported the property sold for $6.1 million.

http://www.sdlookup.com/Portals/0/NTForums_Attach/mi%20arbolito.pdf
http://www.sdlookup.com/Forums/RegionsandNeighborhoods/tabid/62/forumid/186/tpage/9/view/Topic/postid/14635/Default.aspx

It’s interesting that the people who brokered the deal currently have no available trust deed.
http://www.pointcenter.com/Investor/AvailableTrustDeeds.aspx

[34f3f3f]

I just read the Norris Group (see above) ebook, and a startling realization at the very end of it, is that the loan to value ratio (LTV) is based on appraised values. The authors go to lengths to explain (including on their video) that this provides enough skin in the game, for lender peace of mind. That seems like very little skin in the game to me, relying too much on realizing your capital in the event of default, as opposed to financial pressure on the borrower to follow through. I wonder if this is typical? Just my tuppence.

[34f3f3f]

I just read the Norris Group (see above) ebook, and a startling realization at the very end of it, is that the loan to value ratio (LTV) is based on appraised values. The authors go to lengths to explain (including on their video) that this provides enough skin in the game, for lender peace of mind. That seems like very little skin in the game to me, relying too much on realizing your capital in the event of default, as opposed to financial pressure on the borrower to follow through. I wonder if this is typical? Just my tuppence.

[34f3f3f]

I just read the Norris Group (see above) ebook, and a startling realization at the very end of it, is that the loan to value ratio (LTV) is based on appraised values. The authors go to lengths to explain (including on their video) that this provides enough skin in the game, for lender peace of mind. That seems like very little skin in the game to me, relying too much on realizing your capital in the event of default, as opposed to financial pressure on the borrower to follow through. I wonder if this is typical? Just my tuppence.

[34f3f3f]

I just read the Norris Group (see above) ebook, and a startling realization at the very end of it, is that the loan to value ratio (LTV) is based on appraised values. The authors go to lengths to explain (including on their video) that this provides enough skin in the game, for lender peace of mind. That seems like very little skin in the game to me, relying too much on realizing your capital in the event of default, as opposed to financial pressure on the borrower to follow through. I wonder if this is typical? Just my tuppence.

[34f3f3f]

I just read the Norris Group (see above) ebook, and a startling realization at the very end of it, is that the loan to value ratio (LTV) is based on appraised values. The authors go to lengths to explain (including on their video) that this provides enough skin in the game, for lender peace of mind. That seems like very little skin in the game to me, relying too much on realizing your capital in the event of default, as opposed to financial pressure on the borrower to follow through. I wonder if this is typical? Just my tuppence.

[briansd1]

Investing in trust deeds is a risky game. People who turn to hard-money lenders don’t have access to other sources.

If you’re going to invest through an intermediary, best to do so in a booming market and hope to get out before the crash.

I’m personally leery of investing through a broker because the broker and developer will pay themselves and live the good life while the small investor take the risks.

Large multi-million dollar deals are above my pay-grade. I prefer to invest on a small scale I can control.

As a small investor I would buy a rental property and try to get a good tenant in there. I would rent out the property for a while and offer the tenant a purchase option where I carry the note. Perhaps the tenant is a great tenant who doesn’t have a credit history or documented income, but he is a good, credit-worthy person.

You know the history of the property and the buyer. That’s a good risk for you. Your downside protection is if the buyer doesn’t pay, you foreclose and take back the property.

You could also buy a small building or shophouse and put a business tenant in there to cover your costs — perhaps a dry-cleaner, a food-to-go restaurant or another small business (This is harder to do in San Diego because of the dearth of properties). If the business grows and takes off, the owner might buy the property from you because the location is valuable to him. Ofter to carry the note.

If you have friends and relatives to work with you, you can even start a small business and then sell it after it’s established (and carry the note).

My small investor method takes a hands-on work and knowledge of the local market. You may get ordinary returns for a while, but with time and happenstance, you may get great returns.

[briansd1]

Investing in trust deeds is a risky game. People who turn to hard-money lenders don’t have access to other sources.

If you’re going to invest through an intermediary, best to do so in a booming market and hope to get out before the crash.

I’m personally leery of investing through a broker because the broker and developer will pay themselves and live the good life while the small investor take the risks.

Large multi-million dollar deals are above my pay-grade. I prefer to invest on a small scale I can control.

As a small investor I would buy a rental property and try to get a good tenant in there. I would rent out the property for a while and offer the tenant a purchase option where I carry the note. Perhaps the tenant is a great tenant who doesn’t have a credit history or documented income, but he is a good, credit-worthy person.

You know the history of the property and the buyer. That’s a good risk for you. Your downside protection is if the buyer doesn’t pay, you foreclose and take back the property.

You could also buy a small building or shophouse and put a business tenant in there to cover your costs — perhaps a dry-cleaner, a food-to-go restaurant or another small business (This is harder to do in San Diego because of the dearth of properties). If the business grows and takes off, the owner might buy the property from you because the location is valuable to him. Ofter to carry the note.

If you have friends and relatives to work with you, you can even start a small business and then sell it after it’s established (and carry the note).

My small investor method takes a hands-on work and knowledge of the local market. You may get ordinary returns for a while, but with time and happenstance, you may get great returns.

[briansd1]

Investing in trust deeds is a risky game. People who turn to hard-money lenders don’t have access to other sources.

If you’re going to invest through an intermediary, best to do so in a booming market and hope to get out before the crash.

I’m personally leery of investing through a broker because the broker and developer will pay themselves and live the good life while the small investor take the risks.

Large multi-million dollar deals are above my pay-grade. I prefer to invest on a small scale I can control.

As a small investor I would buy a rental property and try to get a good tenant in there. I would rent out the property for a while and offer the tenant a purchase option where I carry the note. Perhaps the tenant is a great tenant who doesn’t have a credit history or documented income, but he is a good, credit-worthy person.

You know the history of the property and the buyer. That’s a good risk for you. Your downside protection is if the buyer doesn’t pay, you foreclose and take back the property.

You could also buy a small building or shophouse and put a business tenant in there to cover your costs — perhaps a dry-cleaner, a food-to-go restaurant or another small business (This is harder to do in San Diego because of the dearth of properties). If the business grows and takes off, the owner might buy the property from you because the location is valuable to him. Ofter to carry the note.

If you have friends and relatives to work with you, you can even start a small business and then sell it after it’s established (and carry the note).

My small investor method takes a hands-on work and knowledge of the local market. You may get ordinary returns for a while, but with time and happenstance, you may get great returns.

[briansd1]

Investing in trust deeds is a risky game. People who turn to hard-money lenders don’t have access to other sources.

If you’re going to invest through an intermediary, best to do so in a booming market and hope to get out before the crash.

I’m personally leery of investing through a broker because the broker and developer will pay themselves and live the good life while the small investor take the risks.

Large multi-million dollar deals are above my pay-grade. I prefer to invest on a small scale I can control.

As a small investor I would buy a rental property and try to get a good tenant in there. I would rent out the property for a while and offer the tenant a purchase option where I carry the note. Perhaps the tenant is a great tenant who doesn’t have a credit history or documented income, but he is a good, credit-worthy person.

You know the history of the property and the buyer. That’s a good risk for you. Your downside protection is if the buyer doesn’t pay, you foreclose and take back the property.

You could also buy a small building or shophouse and put a business tenant in there to cover your costs — perhaps a dry-cleaner, a food-to-go restaurant or another small business (This is harder to do in San Diego because of the dearth of properties). If the business grows and takes off, the owner might buy the property from you because the location is valuable to him. Ofter to carry the note.

If you have friends and relatives to work with you, you can even start a small business and then sell it after it’s established (and carry the note).

My small investor method takes a hands-on work and knowledge of the local market. You may get ordinary returns for a while, but with time and happenstance, you may get great returns.

[Author]

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