Need feedback on starting Trust Deed Investing

2 Replies

I would like feedback from others on this idea, and get their insight, and knowledge. I am wanting to start a First Trust Deed Investment Business. I am starting small, I currently own another investment home that is paid off, and rented out. Starting with this home, I am wanting to take in a few investors who want to earn 5-6% interest on their money, backed by the trust deed of the real estate from the home. Starting with this home and expanding as time permits.

Thank you for your input / help.

Dave

I'm not sure I understand the business you are considering. After you encumber the property you own, the deed of trust is not yours, it's the investor's. Maybe I'm missing something...

Not sure I understand the model you intend to use and build in, either.

Investors are people with money acting as principals. Intermediaries are people who perform a service, like licensed brokers and agents.

Successful trust deed investors are typically people who understand the collateral (real estate) and have some experience working with the property type that the loan(s) secure (SFR's, or apartments, commercial or land). They also have studied title so they both know how to confirm loan position, recognize conflicts and resolve problems before these become losses.

Many would-be trust deed investors begin by brokering notes. This will likely require licensing as a real estate broker; perhaps NMLO, too.

How many of these brokers build equity in notes is by finding existing bank notes to buy using investor money, or engaging in hard money lending, and by making a spread between note rate and investor yield. Perhaps this is what you are trying to do?

I have watched closely as a few others have invested in paper without licensing and shake my head. At minimum, note buyers are foolish if they attempt to service loans (collect money themselves) as there are licensed professional services that do this very affordably and keep loans in compliance.

If you want to learn more about investing in notes or performing a service, check out any number of books on Amazon. If you are interested in non-performing loans, look for Performance Anxiety by Gordon Moss and see if that's for you, too.

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