All trust deed investors investing for their retirement
agree
that if their retirement plan dollars are stuck in a low yielding
mutual
fund, a bad stock
that might be going down in value, or a savings account which is paying
2-3-4% when a trust deed can earn 10%, the trust deed can offer that
investor
as much as 5 times more retirement income. Secondly: All trust
deed
investors still planning for their future retirement (IRA, KEOGH, 401K
etc.) know that through the effects of annually compounding that 10%
interest
trust deed investments can earn a retirement planner 5 times more
retirement
nest egg. Or even slice years off the time necessary to reach ones
current
goal or target date for retirement. Anything wrong with retiring richer
or even reaching retirement sooner.
Show me the math
John puts $1,000 in his IRA at 2.5%
compounded
annually. At the end of 20 years that $1,000 becomes $1,638.61 and
would
pay approx. $41.00 per yr. retirement income to John at 2.5%.
(using
any calculator multiply 1.025 times $1,000 and punch the equals button
20 times to compound annually for 20 tears. 1.025 represents 1 your
initial
$1,000 plus .025 your 2.5% yield)
Fred on the other hand puts his
$1,000
in 1 year trust deed investments paying 10% for the very same 20 years
which would become $6,727.50 and would @ 10% then pay $672.75/yr.
income for the same $1,000 invested. (using any calculator multiply 1.1
times $1,000 and punch the equals button 20 times to compound annually
for 20 years. 1.1 represents 1 your initial $1,000 plus .1 your 10%
annual
yield).
That is 15 times more retirement income people!
How can I invest in trust deeds with my IRA
Ask your accountant and your present IRA or pension plan
administrator/custodian
if you can invest in well secured trust deed investments with the
particular
plan you currently have. If they say ok, we'll add you to our data
base,
if
they say no, write to us for a list of pension plan administrators that
will. Always check with your cpa however because although our 100
investors
are funding their trust deed investments with everything from their
family
trusts to their IRA's I can't guarantee that your current particular
plan
that you are using now can.
Overview
It doesn't take a rocket scientist to understand that people everywhere
coast to coast need to live in houses. All houses in existence
today
were financed (or are currently still being financed) by someone (or
some
entity like someone's cash, a bank or a savings and loan) because most
people can't afford to pay cash up front on the barrel head for
something
as expensive as a home. If this confuses you substitute the words "new
car" in place of the word house as the theory is the same. For many
years
the document used to secure most house financing was something called a
mortgage. A mortgage is nothing more than a great big IOU.
Mortgages
still exist in many states but over the years (now in more than 1/2 the
states coast to coast) another document called the trust deed
developed
and is now more and more widely accepted because of the simpler steps
required
(as compared to a mortgage) to foreclose. Although mortgages are
still in use in some states today they have become less popular than
trust
deeds; in that a mortgage holder/investor/lender will have to
face
something equivalent to a law suite in order to foreclose on a mortgage
as mortgages don't contain a power of sale clause. Trust Deeds
accomplish
the same end as a legal instrument used to secure debt against real
estate
but do it way better by a trust deeds unique ability to assign certain
rights or powers on the lenders behalf to a neutral 3rd party trustee
(normally your title company). The need for an attorney and any lengthy
legal battle or process necessary in order to foreclose has been
streamlined
or eliminated. A trust deed in simple terms sets out that if after a
loan
against real property has been funded & the borrower subsequently
does
not pay his payments on time as agreed you the lender won't need an act
of god, a judge, jury and an attorney. The trustee (your title
company)
exercising your rights under the power of sale clause contained
in all trust deeds allows you to offer the property for sale at a
foreclosure
sale in approx.. 90 days (plus approx.. 20 business days of
publication)
from when payments stopped. Instead of being tied up for years in
court,
either someone shows up at that above described sale to cash you out or
the property is automatically sold and title passes to you the
investor/lender.
If one can learn and remember to follow 37 simple rules
(similar
to rules that we all must follow in order to keep you and I alive on
the
highways each day) even if one trust deed does then go awry you'll find
that for example in simple terms foreclosing on a $100K house and
receiving
full title to the house under the terms of your $50K or $60k first
trust
deed may not be the end of the world. Today about half of all
debt
secured against all real estate in these United States is
secured
through the use of a trust deed. Some of our 100 private investors
think
that trust deeds are easier to understand than for example learning to
invest in the
stock
market. After all, if trust deeds secured by houses are good enough
throughout the ages for all banks and savings and loans to invest in
they
should be good enough for you and I.
What if I only have $50K and not $500K to invest
Many of our 100 investors started out asking this very question and the
answer is simple. If 5 people have the same problem wishing to fund a
$250K
loan but only have $50K each no problem as we have developed a safe way
to put those people together. At 20% ownership each in that $250K new
First trust deed
the problem is solved. This is called a fractionalization.
How long will trust deeds continue to be a secure investment
In my opinion trust deed investments well secured by single family
houses
will continue to hold their value so long as people continue to need to
live in houses.
How does our trust deed investments differ from any other trust
deed
In the above example of the $100K house that you had to take back when
the borrower didn't make his payments as agreed on your $50K first we
had
a "proper trust deed investment" because we made sure that we had $2 of
the borrowers equity dollars as collateral for every $1 of our dollars
invested. Hence two to one collateral (also expressed as 50% LTV=loan
to
value ratio). Now you should already understand why smart trust deed
investors
rule #1 states simply always require as close to 2 to 1 collateral for
each of your loan dollars on houses as you can get. There are a few
more
parts to the rule such as if the home is to be owner occupied we will
allow
up to a 60% loan to value ratio but for example if the security was
instead
vacant land you better keep the ratio to 3 or 4 of their equity dollars
for each of yours (25 to 33% Loan to value ratio).
Why would I need a broker if I learn all 37 trust deed investing
rules
myself?
In these United States there are usury laws which regulate how much
interest
you can charge a borrower. California real estate law exempts real
estate
brokers from that law, so a broker can actually charge a borrower a
fee for his services and still net you a higher interest rate than you
could legally charge yourself. I charge my borrowers for my
services
so there is no need to charge investors anything for our service. I
can't
speak for you but I would never attempt to learn how to remove my own
tonsils
especially if a trained professional at the hospital said there would
be
no charge for the service! Would you?
Sounds too good to be true what is the down side?
No investment is without risk or it wouldn't be considered an
investment.
I have been a licensed broker for nearly 26 years now and I have yet to
see an investor lose his investment on any of nearly 1,000 well secured
trust deed investments following the 37 rules. Remember what I said
earlier;
After all, if loans on houses are good enough for banks and savings and
loans to invest in nationally they should be good enough for you,
right?
In hard money lending as a rule borrowers don't have a million
dollars
in the bank and flawless credit. Smart trust deed investors know that
unconventional
borrowers willing to pay high interest rates sometimes don't pay on the
first of the month as agreed. Although over the big picture this poses
no serious threat, it can pose a delay to your income if you
are
trying to rely on the trust deed payments for monthly income. Smart
trust
deed investors who know all 37 rules never put more than 10% of their
trust
deed portfolio into any one trust deed. then, if a delay arises on a
note
the other 90% of your income stream is uninterrupted. Don't fund a loan
against a piece of real estate for an amount that exceeds what you
would
be willing to buy the property for. Yes you would be willing to pay
$60K
plus back interest and fees for a home that is appraised at nearly
$100K
because this does happen on rare occasion if a borrower doesn't pay and
you are forced to foreclose to protect your investment.
How do you know so much about it
I started in the real estate business when I was 20 and sold real
estate
in the bay area. A month didn't go by that some deal would pop up that
required the seller to carry a note when that seller needed cash. My
broker
had a few investors that would buy those notes. Later I began to buy
real
estate in the bay area and after I had accumulated 22 rentals I had a
few
of those private investors calling me now to buy or fund that excess
needed
now and then. Later I decided to sell those 22 alligators when the
smoke
cleared there I was with a hand full of notes myself. The next phase of
the un planned part of my real estate education found me in the
foothills
(Grass Valley) building homes. The bank took so long and had so much
red
tape I felt like an American Gladiator simply trying to obtain
construction
financing (and the nail pounding hadn't even started)!
The first time I used private money to build a house that
retiree/investor
said, "I have more funds available, Brad"," find me some more
construction
loans". After building 20 houses myself later I had a dozen
retirees
and retirement planners saying "find me another house to finance Brad".
Each time I encountered a problem with a privately funded trust deed
investment
no matter how small (whether I was the borrower or the lender) I came
up
with a solution that worked and wrote it down on paper and 15
years,
1,000 loans brokered, 50 web pages, a lot of gray hairs and
37
trust deed investing rules later I'm here wanting to share this
recipe
that has already proved itself on a thousand investments for a hundred
investors for the better part of two decades with you.
Why would a borrower pay me 10% interest when the banks offer
loans at
a lesser rate
Many reasons of which I will touch on two. Probably the biggest reason
is time. Most of our borrowers would like to build a home and be living
in the new house in a few months instead of still finding themselves
dealing
with the aggravation, frustration, and verification a bank wields! A
developer
knows that time is money and a slightly higher cost private loan might
be not such a bad deal after subtracting for the costs incurred for
months
spent waiting for bank financing. Secondly: Our analogy is that if you
do have to foreclose nothing is more important than the collateral for
your loan. You won't get the savings account, the wife's income, or the
sail boat. As a private investor you will learn yo hang your hat on the
equity in a transaction and pay a lot less attention to the irrelevant
details that conventional lenders spend actually months scrutinizing.
Scrutinizing
the collateral or equity for each trust deed investment will shield you
not verifying useless details of borrowers rags to riches to rags
stories.
Anyone including doctors or those with great credit can divorce, go
broke,
climb into a bottle, and so on. So while the bank is wasting time
checking
the borrowers savings account balance and wife income, we'll be instead
looking at the only really relevant things concerning the actual
collateral
for our loan. a flip side occurs once you adopt this philosophy. If a
doctor
with flawless credit wants a 70% LTV loan, it's not a trust deed
investment
and never will be one. If a divorcee who is changing jobs currently and
has no spousal income, no sail boat, and no credit established but
wants
a 50% LTV loan offering us 10% and 2 dollars of equity for every loan
dollar
you can see where this loan request has just passed 1 of the 37 rules
and
may result in a trust deed investment if it can meet the rest of the
criteria.
How can I invest in trust deed investments with my IRA
Ask your accountant and your pension plan administrator if you can
invest
in well secured trust deed investments with the particular plan you
currently
have. If they say ok, we'll add you to our data base, if they say no,
write
to us for a list of pension plan administrator that will. Always check
with your cpa however because although our 100 investors do so with
everything
from their family trusts to their IRA always be sure that the current
pension
plan custodian or administrator that you are using can. NOTE: The
following
information may contain errors. Some of the following companies may or
may not allow you to take title to real property in the event you have
a foreclosure, so always be sure to check with your attorney and
accountant
before choosing a custodian. From my experience I have found that Polycomp Administrative Services, Inc.
(listed below) seems to be able to handle all aspects for private
investors
and handle them quite well !
Thanks,
Brad Evans
-
PENSCO
Pension Services (Very Difficult to work with - 0 stars)
-
250 Montgomery Street, Third Floor,
-
San Francisco, CA 94104
-
tel: 415-274-5600
-
Polycomp
Administrative Services, Inc. (Easiest to work with & my personal
choice - 5 stars)
-
2999 Douglas Boulevard, Suite 155
-
Roseville, CA 95661
-
(800) 952 8800 [toll free]
-
(916) 773 3480 [office]
-
(916) 773 3484 [facsimile]
-
GListon@polycomp.net
-
Polycomp
Administrative Services, Inc. (easy to work with & 5 stars)
-
6400 Canoga Ave. #250
-
Woodland Hills, CA 91367
-
tel: 818-716-0111
-
Lincoln Trust Company (0 stars)
-
P.O. Box 173859
-
Denver, CO 80217-3859
-
tel: 1-800-962-4238
-
Sterling
Trust Company
-
7901 Fish Pond Rd.
-
Waco, Texas 76710
-
tel: (800) 955 3434 Ext. 417, 217, 420
-
Equity Trust Company
225 Burns Rd
Elyria,Ohio 44035
Phone 440.323.5491 ext.453
Facsimile 440.366.3750
-
4250 Executive Square
La Jolla, CA 92037-9105
tel: 1-800-972-1992
Whether you have an IRA (KEOGH, SEP-IRA etc.) that you would like
to
see grow at a faster rate for the future, or if you want higher yields
on your investment dollars for income now, trust deeds may be just the
thing for you. First you'll need to be willing to accept the fact that
all aspects of trust deed investing moves very slow. Secondly you'll
need
to accept the fact that there is a minimum 1 month delay on monthly
income
from most trust deed investments as borrowers by nature like to wait
'till
the last day to pay their payment, then the bank loan servicing takes
another
week or two to see that the check clears and disburse that payment,
then
the mail takes another few days. Trust deed investing is very slow. If
you have some patience accept it, if not it , TD's may not be the thing
for you!
Lastly we have too much fun sharing this with nice folks
to
spend time with those that are impatient, demanding, rude or nasty. if
you are like that no need to contact us. If trust deed investing
interests
you and you are a nice person for heavens sake contact me and give us a
chance to answer all you questions or send you our video or other
propaganda!
Let me know how I can help you.
Thank you
Brad
Evans
Send
me some feedback
Brad Evans Real Estate Loans
P.O. Box 163
Cedar Ridge, Ca. 95924
Tele: 530-272-5916
Fax: 530-273-5636
©1999 Brad Evans
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Brad Evans Real Estate Loans
Ca. Dept. of Real Estate Brokers Lic. #00426805
