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.

Real Estate Investments In Safe Trust Deeds

The Straight-Interest-Only Note V The straight-interest-only note, is one that does not require payments of principal during the life of the loan.

Keep all documents and important papers that describe, and provide evidence and security for the loan, in a safe and accessible place. It requires that the borrower usually make regular monthly payments of interest and principal throughout the period of the loan. Find out the experience, knowledge and integrity of the broker with whom the transaction will be arranged or made. The reason is because the original note is not a recorded instrument, like the trust deed. Title insurance, and the process that is associated with the creation of a title insurance policy, provides the investor with an in depth examination of the property title and everything that affects it. The instructions for escrow that you will be requested to sign could be unilateral (separate set of instructions for the buyer and separate ones for the seller) or bilateral (one set of instructions for the seller and one for the buyer).

While all of your questions may not be answered, the following is a short list of the most frequently asked questions that pertain to mortgage investing, and should provide you with a good idea of what you can expect.
An asset based lender, Coppercrest Funding, primarily bases their decision on whether or not to provide a loan based on the amount of equity in the property. Private money loans are required by borrowers, who fail to meet guidelines set up by conventional institutions such as banks, life insurance companies and conduits. _ Every stock investor is charged a fee from their stock broker. Within its pages you will discover all of the essential aspects that are required in order to make investing in a deed of trust a secure and safe risk taking experience.

Although, in some cases, depending on the state, sometimes the issue of a lost note can be resolved by means of a lost note affidavit.
After 20 years, the 0. Know the market value and equity of the real property, as well as your loan security. Casualty and Fire Insurance V Insurance is imperative when it comes to making a trust deed investment; because as an investor you will want to ensure that you have sufficient insurance to protect your investment. Acceleration Clause V An acceleration clause should be apart of the escrow documents. An action must be filed in court to reconstruct or restore the lost note. Know the market value and equity of the real property, as well as your loan security.