If you are interested in investing in deeds of trust, you will discover that a great deal of the money involved comes through private lenders or Hard Money Lender. The terms are frequently used interchangeably, but there are differences between the two. Hard money is sought in the actual financing of a real estate project, while private funding is based on the property value, termed asset-based lending.
Simply put, with trust deeds an investor funds a developer currently working on a real estate project, with their name put on the deed as the lender. Interest is collected by the investor during the life of the project. When complete, the principal is set to be repaid in full.
Banks generally do not go out of their way to cover this type of investing, while private money lenders are more open to it. It is a positive practical thing for investors, especially those new or just beginning in this field, to use a private money broker in order to help insure the best return and the least risk they can find.
Trust deeds, in the past termed ‘alternative investing’, are not easy to manage since there are so many factors involved and opinions have to be obtained and considered from each of these. Time is another consideration—payoffs range from six months to ten years—there is no 30-year fixed period as in the mortgage field. These investments have a very wide range of risk factors and are difficult to price as a result.
Working with a well-known experienced broker when investing in trust deeds can be not only advantageous, but a critical factor since the details and structure of a private loan–qualification, terms, fees and rates–can range widely. Three top reasons for using a broker are as follows:
- While lending money to only one or two borrowers might seem less stressful, a broker can provide you with more options, is possibly safer and more reliable than do-it-yourself.
- An experienced broker will have the needed ability to assess current market conditions and determine if a borrower’s background is the best person for you to lend money to.
- Brokers know the investment opportunities available and are able to base them using the type loan, kind of property and location, loan to value percentage, etc.
These type investments can, with a secure loan from a good borrower, however, have a reliable payment coming in on a monthly basis, allowing the lender to have a secure income even as other financial markets are rising one day and dropping the next. Again a good broker can point you in this direction when you might not be able to find the best set up by yourself.
Make certain you understand the different sorts of loans and all conditions available when investing in deeds of trust. Choosing the right broker who has the knowledge and expertise you need can be your best asset.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.