Chapter 13 - Pitfalls for Investors to Watch For

Although a trust deed investment is one of the safer investments you can make, it is imperative that you understand there are still risks involved. The best way to ensure that you avoid pitfalls is to learn as much as you can about trust deed investing and everything it involves. However, to give you an idea of some of the pitfalls you should watch out for, the following are a few tips:

It is always in your best interest to physically inspect any real estate you are intending to invest in, even if the property has already been checked out by the appraiser, broker or title company.

Take the time to establish your personal opinion regarding the value of the real estate collateral. You can do this by using a number of approaches such as:
? Ask your realtor for information on closed sales of comparable properties
? If you were to purchase the property today, what would it be worth to you?
? Read the appraisal

Take the time to learn the difference between personal and real property. You dont want to confuse personal property for real property when you are establishing your opinion in regards to value. Real property is that which is considered to be affixed to the earth. However, dont mistake all property that is fastened to the ground to be real property; some of these items are personal.

You should make it a point to know how the borrower is planning to pay the private money loan. Just because short term loans are primarily funded based on real estate equity, you should discover what the borrower has already pre-approved for their take out loan.

When it comes to Loan to Value Ratio that concerns homes occupied by owners, you should never lend out a LTV that exceeds 60%, even if the home appears to be the most ideal of owner occupied homes. Likewise, as far as non-owner occupied homes are concerned, the LTV should not exceed 50%

You should never rely on future promises regarding improvements unless the proper draws for the upcoming work that is to be completed is officially set up.

Make sure you do not want or require any final, additional documentation before you close. Such documentation can include, but is not limited to following:
? Certificate of occupancy
? Well report
? Proof of purchase cost
? Notice of completion
? Closing statements
? Roof reports
? Toxic reports
? Sign off of final permit card
? Etc.


Take the time to research everything you can about trust deed investments. Speak to qualified professionals, and dont be afraid to ask questions, or rethink your decisions before making an investment. By following these guidelines, you will lower the risk you take when making a trust deed investment, and will be less likely to experience a pitfall.

Free Forms Deed Of Trust

With a mortgage investment you have control over when you receive your checks, which allows you to obtain your money as quickly as possible.

The reason why this is beneficial to the investor is because the borrower is more likely to meet payments and not cause problems. The amount of the title policy premium is based on the amount of money that is being insured by the loan. The loans provided by Coppercrest Funding are first secured with deeds of trust on real estate, and in addition are supported with the borrowers personal guarantee. The reason is because LTV means to loan a percentage of money that is less than the actual property value. When it comes to real estate lending, LTV is the single most important element, because an adequate LTV protects the initial investment, while a remaining cushion of equity helps to pay off any unexpected costs that may occur. Remember, all things being equal, the greater the Loan to Value, the more risky the loan.

If there is a default on the loan, the loan servicing officer may choose to start foreclosure.
To be on the safe side, it is always in your best interest to ask whether or not a construction control company is used. The loan-to-value principal is what makes carrying a high yield with a trust deed investment secure. _ A deed of trust usually involves a quicker foreclosure, because the most common type of foreclosure is a non-judicial one.

When the holder is in possession of the priority lien, they can foreclose and any junior lien holders wont be able to stop it.
) _ Other Liens (property taxes, judgment liens, etc. When a third party is involved, it becomes the loan servicing departments responsibility to bill the borrower for regular monthly payments. Private money lending refers to loans that have been collateralized by real estate, and are made in regards to the decision of making a loan that is based mainly on the protective equity within the property.