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Investor Information
- What is a Trust Deed?
- A Trust Deed is a document recorded with a county recorder’s office creating a secured lien on real property which provides collateral for lenders and trust deed holders. Some states use a Mortgage instrument rather than a Trust Deed.
- Why should I invest in Trust Deeds?
- Investors enjoy a higher return on their invested capital (9.5% to 14.99%) compared to other fixed income securities. The investments are secured by real estate. We prepare all the necessary steps to help select the investment, collect and distribute monthly payments, and service the loan through the payoff of the loan.
- How do yields compare to other investments?
- Investment yields range from 2-3 times above bank offered CD rates (9.5%-14.99%).
- Why do borrowers pay higher rates for their loans when bank loans are less?
- Some of the reasons borrowers request hard money loans are:
- Fast loans
- Short term (1 to 5 year) loans
- Minor credit problems
- To pay judgments and liens such as Federal or State taxes
- Property may have some problems that make it difficult to obtain a bank loan
- Divorce settlements
- What is the difference between a First and Second Trust Deed Investment?
- The difference between a First and Second Trust Deed is the priority of the lien based on the date the Trust Deed is recorded. The earlier recording date would have priority (i.e. first position). If you have a Second Trust Deed and the Borrower fails to pay the First, you would be responsible to make the First Trust Deed payments or suffer the risk of being foreclosed out and losing your invested capital.
- How should I evaluate a property for a Trust Deed Investment?
1. The equity in the property, also known as the Loan-to-Value ratio (LTV). Mt. Tai Asset Management requires a minimum of 35% equity, or a maximum LTV of 65% for all our trust deed investment offerings. The Loan-to-Value ratio is calculated by dividing the total loans against the property by the current market value of the property. For example: Loan Amount $250,000 / Property Value $500,000 = 50% LTV.
2. Property type such as: homes, apartments, commercial and industrial buildings.
3. Area of the property. Select an area you are comfortable and familiar with.
- How do investors get paid off at the maturity date of the loan?
- In most instances borrowers will sell the property and pay off the loan with the sale proceeds or refinance with another Lender.
- What does an investment package from Mt. Tai Asset Management include?
- Loan Summary of the Trust Deed Investment
- Original Note
- Original Deed of Trust
- Appraisal with original photographs and area location map
- Preliminary Title Report
- Insurance Policy for the property
- Credit Report of the borrower
- Lender/Purchaser Disclosure Statement
- Loan Servicing Agreement
- How is loan servicing handled?
- Mt. Tai Asset Management acts as the Loan Servicing Agent for all the loans that we offer to Investors. We handle everything from communicating with the borrowers to collecting the payments. We also monitor the status of property taxes and property insurance and issue demands for payoff statements and reconveyances once the loans are paid in full. We have many years of experience in servicing loans which includes expertise in: foreclosure processing, bankruptcies, eviction service, and REO management. We constantly update our investors of the status of their loans.
To receive more information about trust deed investing and how to get started please click here. |
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