Here Are Some Tips That Will Help You With Trust Deed Investing

Photo of author

( — May 31, 2018) — Trust deed investors are quite common nowadays. However, for making a trust deed deal become a successful one, there are certain things that you must know. Today we will share with you some of the most important information related to this type of investing.

Our tips are provided by private investors that have a lot of experience in this domain. Following these pieces of advice should definitely help you make a profit and secure your investment so let us get started.

Learn more about the basics

It is important to know all the details when it comes to trust deed investing. You should inform yourself about how these deals work and luckily for you, there are plenty of online resources that will help you with that, such as Creditfix.

You might think that you already know everything there is to know, but the truth is that there are many small things that you might have overlooked at first. Don’t be ashamed to educate yourself constantly.

Read the preliminary title report carefully

This report is basically a snapshot of the title condition before the escrow closes. You will need to familiarize yourself with all the items that are mentioned there. This way you will find out more about things such as the assessed valuation, mineral rights, assessments and properties easements.

Don’t mistake personal property for real property

There is a difference between personal property and real property, despite the fact that it is a bit tricky  to understand this at first. A real property can be defined as “that which is affixed to the earth”. The situation becomes more complicated when it comes to trade fixtures, mobile homes and others.

Other documentation

You might be wondering whether other additional documentation is needed prior to close. In some cases you might need it. Here is some documentation that you might want: roof reports, closing statements, final recording of lot splits, code compliance inspection, well report, notice of completion.

Important clauses

Your contract might need to include other clauses. For example, you may want to add prepayment penalty, partial reconveyance, timber clause or late charge. Also you should know who will hold the original note and deed of trust. In the State of California for example, it is illegal for the loan broker to hold them.

How to establish property value

When it comes to deciding the value for a real estate you must be very careful. Your money is at stake so make sure that you inspect the property yourself. Even if the title company, the appraiser and the broker already inspected it, it is important that you also go there and see it for yourself.

Find out how the borrower will repay the short term loan

These private loans are usually approved based on the equity of the real estate, but you should get more details from your borrower. For example, find out whether the speck home is pre-sold or if the borrower is pre-approved for his take out loan.