First trust deed investing scam
The first is that, as a consequence of the housing bubble of , the government cracked down hard on the lending industry. To this day, it is one of the most highly regulated industries on both the state and federal level. Second, there are companies, with years of experience, offering opportunities in fractionalized investments like deeds of trust.
This essentially breaks down the capital barrier and makes them passive investments for their clients. The big picture is that trust deeds investments are highly regulated, have shorter hold periods, lower investment minimums, offer capital preservation, are generally passive and delivers a fixed income, making it an ideal investment to deploy for a long-term investment strategy.
You may be wondering, what are the risks because every investment has them? For trust deeds it is liquidity, because you are unable to cash out on your investment before the loan matures. You must wait for the borrower to pay it off, and there is the risk of the borrower defaulting on the loan. If the borrower defaults and the property must be taken back through foreclosure and then sold to recoup investor principle, this process can take time.
Low investment minimums and shorter turn-over time make it easy to maneuver through the real estate market, which is essential when you are utilizing retirement funds to invest. In a self-directed IRA account, the interest income from trust deeds will compound tax-deferred or tax-free depending on the account , and with enough foresight, their ability to generate a fixed income also can be used to help bridge the income gap during your retirement years.
The primary problem that many retirees face is how to replace the income they used to earn from their job. Sources of income from pensions, social security, disability and income properties may still not be enough; and, unfortunately, not a lot of thought is given to creating a strategy on how to effectively use the retirement assets once we reach those latter stages of life.
Sounds too good to be true, right? You find a company that offers annualized returns of 10 percent. You may run into a default or two down the line, but because of the low investment minimum your portfolio is diversified across multiple trust deeds.
While the defaults work themselves out, the others are still performing and providing you an income. As you get older it is no secret that your expenses may increase for things such as health care, which accounts for increased distributions as years pass. The difference between the build-up in Scenario Two vs.
You can see the potential that trust deeds present if you have the wherewithal and the ability to maintain you cannot discount the unexpected the integrity of your principal amount. It was difficult to understand what type of loans were being made. They were fraught with conflicts of interest. Management may have incentives to make risky loans rather than keep money in cash and wait for a less risky loan. The managers did not have enough of their own skin in the game. They were illiquid and required investors to tie up their money for a substantial amount of time.
This Investment was Different Surprisingly, after a detailed review of this investment, we found that this particular trust deed investment defied our negative expectations. There was no leverage. The managers kept the points as their compensation and the points were reasonable. The investment was completely transparent. A monthly report detailed every new loan that was made, modified or paid off. All problem loans were listed and described in detail each month.
All cash invested into and withdrawn from the fund was reconciled and reported on a monthly basis. The managers of the fund had millions of dollars of their own money invested right alongside all of the passive investors and they serviced all of their own loans. They had a reasonable redemption policy that provided investors adequate liquidity. Next we interviewed the principals of the firm as well as their employees. We were impressed, and to make a long story short we told our client we liked his investment and that he should keep it.
During that time it performed very well and weathered several downturns. Not all first trust deed investments qualify as REITs, but this one does.
AUSTRALIAN CURRENCY NEWS FOREX CRUNCH LIVE FOREX
Our substantial industry contacts creates a consistent and robust source of loan submissions for the Fund. Advantages of Investing in our Fund vs Individual Notes Passive Income Our experienced team handles loan screening, underwriting, closing, and servicing while investors collect monthly interest payments.
Consistent Cash Flow Unlike individual note investing, investing in a portfolio of notes helps mitigate prepayment and reinvestment risk. Lower Risk through Diversification The Fund loans on a variety of property types including multifamily, office, retail, mixed-use, industrial, and SFR investment properties. Experienced Team of Service Providers Our strong and experienced team of service providers adds an extra layer of security and oversight to the Fund. Interested in investing in a secured and diversified portfolio of First Trust Deeds?
Give us a call at or click here to request more information. This Presentation is confidential and for its intended audience only. Recipients of this Presentation may not reproduce, redistribute or pass on, in whole or in part, in writing or orally or in any other way or form, this Presentation or any of the information set out herein. This Presentation does not constitute an offer to sell or a solicitation of an offer to purchase limited partnership interests in any security.
The materials contained in this Presentation contain a summary and overview of the Fund. This Presentation does not purport to be complete and is superseded in its entirety by the information contained in the Offering Documents. Nevertheless, depending on conditions and trends in the real estate markets and the economy in general, the Fund may pursue other objectives or employ other techniques that it considers appropriate and in the best interest of the Fund. There will be another Trust Deed Investment Scam.
What could of been done to prevent that? In the above case, there is an affidavit the Title company is suppose to request when a Title is transferred without prior Title Insurance. The seller is to sign yes- in fact he transferred the property. He did in fact sign the deed. Elderly person quit claims to a non- relative on a free and clear property. He forged the quitclaim. The recorders office will record anything signed with a notary stamp. However they did not pull it but let it go through and changed the title to the new owner.
This is an example of the dangers to avoid when investing in Trust Deeds. I have heard of many different cases involving fraud with Trust Deed Investments this year that could of been prevented. You need to make sure your Hard Money Broker cares enough to do his due diligence and be aware of the situations where criminals can enter your life. However you lose interest and all the stress and time of dealing with the situation.
This lesson on dangers to avoid when investing in Trust Deed Investments in Calif. Have escrow have them sign the declaration with a known Notary, before you close.
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