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.

What Is The Best Deed For Irrevocable Trust

Judicial Foreclosure V this process is the more costly method and is when the courts are utilized to foreclose on the property, and an attorney is required.

025 1. However, if problems do arise, the borrower is encouraged to set them right should they wish to protect their equity in the project. Know the market value and equity of the real property, as well as your loan security.

The Real Estate Law includes what is commonly referred to as the multi-lender law.
) _ Receivership or Foreclosure _ Property held in Trusts, Probate, etc. To be on the safe side, it is always in your best interest to ask whether or not a construction control company is used. However, if an escrow involves tax and legal problems and is extremely technical, than the investor should seek the advice of an attorney. _ A loan can have no more than 10 note holders or lenders. ) if they fail to pay the loan. Ultimately, the choice is yours.

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.
There are a number of reasons for foreclosure, including both monetary and non-monetary reasons. 00 and . This or more clause enables the borrower to rightfully increase their monthly payments when they choose, as well as the right to fully pay off the loan without being subject to penalty. Furthermore, Coppercrest Funding will never fully rely on appraisals, and will confirm values by utilizing their own internal comparable sales analysis through an interviewing process with real estate brokers familiar with the area in question. The reason is because if you use your Pension Plan or IRA, your income is tax deferred and can increase faster, as you will not have to pay taxes so you will have more money for gaining interest.