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.

Name On Deed Of Trust Not On Loan

_ Read the appraisal Take the time to learn the difference between personal and real property.

The standard yield is 11 V 14% per annum. However, although there is always some degree of risk involved when making an investment, trust deeds happen to be one of the safest investments available today, because unlike other investments, a trust deed is secured by actual property V homes, buildings and land. Chapter 14 - Frequently Asked Questions Since you are new to mortgage investing, you may have questions in regards to what it is, what it can do for you, and if mortgage investing is really worth it in the long run.

At some point in your life you will retire, and like many other investors out there, you may be thinking about investing as part of your retirement plan.
You need to understand that while some notes can be negotiable, others are not. What is the Mortgage Investment Yield? However, you are in complete control over your investment, because you are the only one who owns your mortgage. And depending on the results of these factors, they can determine if there is an unpleasant effect on title clarity and even on value. Each month, the loan servicing officer bills the borrower and collects payment, depositing the funds that are received into the account of the investor.

The trust deed will be returned to the borrower once they satisfy all of the terms and conditions that were outlined in the promissory note2.
Obtain certified copy of escrow papers V The investor needs to obtain a certified copy of escrow papers, which is an escrow file that has been verified and signed by an agent of the escrow company and is considered to be a valid and accurate copy of the original document. 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. Furthermore, if it is your wish to not be in direct contact with the borrower, simply set up your mortgage investment plan with a third party, such as a collection firm or your bank, and they will collect the payments and contact the borrower on your behalf. As an investor, you should never feel embarrassed to ask questions. What about IRAs and other Retirement Programs?