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.

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When all is said and done, the entire foreclosure process takes approximately 110 days to complete (usually 90 days for the redemption term and 12 more for the advertising).

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. Ground-up Construction Loan V This loan is one that assumes the borrower has approvals and a completed set of plans which are sufficient so that construction can begin once the loan has been funded. 025: 1 = the single deposit of 0. Borrowers that create this type of problem can often be extremely difficult for an investor to deal with, especially if the investor is new to private money lending. While most investments are made with the same end in mind, the main difference between each investment type are the strategies and the level or risk involved. Make sure you do not want or require any final, additional documentation before you close.

Therefore, it is imperative that you carefully read and re-read all the closing documents.
Know your borrowers financial status and their credit worthiness. Coppercrest Funding underwrites, solicits, processes and funds private money lending, and is extremely reliable because they have more than 25 years of experience in real estate lending. The standard yield is 11 V 14% per annum. The third party should be a qualified, licensed real estate broker. Retirement plan without a trust deed investment Mary places 0. Some of the topics you will find include the different methods for investing, loan underwriting, title insurance, lien priority, escrow and much more.

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The investor (you) should also check and see that the trust deeds and notes, as well as the amount of indebtedness are all in proper order. Without the constraints of such rules, private investors can provide quicker loans that do not follow the same rules as is required for traditional lending. The company providing escrow acts as the middle person in the transaction, and the escrow agent is the one who will process the transaction in accordance to the initial escrow instructions that were agreed on by the lender and the borrower. What about IRAs and other Retirement Programs? For instance there are: Improvement and Renovation Construction Loan V this loan is funded to enhance the value of property based on upgrades and modifications.