1. I am very interested in investing in Fractional First Trust Deeds. I am based in Northern California.
From the Internet, I signed up to receive fractional trust deeds offers, however, the interest rates they offer varies so greatly. I am wondering if anyone has been using any such companies to buy fractional first trust deeds and can "recommend" any?
The companies could be based anywhere in CA or elsewhere.
2. Are there groups or clubs in the SF Bay Area where folks interested in investing in First Trust Deeds meet often? I have looked up Meetups and don't see any relevant ones.
Your help would be appreciated.
Hi Jessica, just to be clear, you are seeking to co-invest with others on a first position deed in fractionalized fashion where each investor owns a portion of the note based on their capital contribution?
I believe that is what she is saying... very common method in CA. were fractionalized bene's are legal... in Oregon for example its not legal unless you register as some sort of security with the state..
When I ran my HML shop in Oakland circa 1987 to 1992.. virtually ever loan we did was fractionalized...
1. Yes, I am looking to co-invest in Fractional First Trust Deeds/Hard Money Loans.
Does anyone have any good recommendations of companies with a good rep that offer such fractional First Trust Deeds in CA or elsewhere?
2. Also are there any investment clubs (focused on First Trust Deeds) where such like minded people meet and exchange ideas? (Preferably in the East SF Bay Area, CA)?
Hi @Jessica Beltz , A few questions, what kind of return are you looking for and what are you seeing? Have you considered buying front end payments on a performing loan?
I offer fractionalized interests in California first trust deeds, but only in the Southern California Area. We don't make any owner-occupied loans, so the loans are secured by properties that are investments for the borrowers.
If you are open to discussing Southern California loans, please contact me. My company has been in business since approximately 1982, and I've been licensed as a California Real Estate Broker since 1979 (www.Bre.CA.gov)
You can get some additional information about fractionalized loans at my webpage,
I hope this has been helpful.
Keep in mind by statute you can't invest more than 10% of your net worth in any one CA deed of trust.
In answer to some of the questions asked:
I would like to invest in Fractional First Trust deeds that relate to Single family homes - preferably in Northern CA and preferably the value of the home being under $1M
I know of a REI in Dallas that uses LLC's for fractional investing in Texas properties. PM me if you have an interest and I can forward a contact.
Look into Equity Build Finance, they offer 12-19% on two year 1st trust deeds.
I think you're going about this backward, @Jessica Beltz . I would first look for borrowers that flip houses locally, see their properties, get to know them well, and built some trust. Many high end rehabbers, doing the bigger dollar flips (which are not hard to find in northern California), cannot find enough cash from one investor and will often seek to fractionalized their 1st position loans.
While you'll have to use a broker to originate a fractionalized loan in CA, I'd never loan money anonymously on their word and certainly not out of state. No offense to the brokers out there but no one will look after your business like you will. By implicitly partnering, I also think you're giving up too much security by investing in fractionalized loans if you don't have to. Plus, why in the world would you ever want to do this out of state when there are plenty of investable properties in your own backyard, where you can kick the tires, meet the borrower, and see the progress.
To me, the benefit of fractionalizing is being able to invest with a relatively small sum of money, subject to @David C. 's excellent comment on the 10% limitation (look up CA SB 978). If you have more than a small sum, I would simply divide it up into a few 1st position loans where you are the lender alone on some smaller value homes. You'll have fewer partners, more control (which to me is more security), and likely make more money. A different topic, but I view these as much less risky than million or multi-million dollar flips, where the costs and comps have a wider swing.
Coincidently, there is a real estate club in your area that focuses on lending, The Bay Area Private Money for Real Estate Investors Meetup, in San Jose. This can't get any closer to Freemont.
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