Whether you have a short or long term investment strategy, deed of trust California investing is the one prime way to fund the growth of your real estate portfolio. Private lending operates the exact way as borrowing funds from a financial institution such as the bank.
Individual bankruptcy by the borrower could hold off your deed of trust California investment. Since a bankruptcy will often stop a borrower from making required payments and stall foreclosure proceedings, you could be left waiting for a bankruptcy ruling with no profit from the note. Knowing your borrower and their capacity to repay the loan will lessen, but not altogether wipe out the associated risk.
So what needs to be kept in mind about the borrower? Here are some thoughts to ponder:
Do you know how to recognize and avoid cash backs, equity skimming and even the blatant “misuse of subordination”. Scams, trust deed fraud and Rip offs are usually easy to spot if you know what to look for and where to look for it.
Are you sure that no one in the deed of trust California transaction is subordinating away too much of their real estate equity to another?
Are you sure that the combined total of all real estate loan proceeds (plus any other financing or funds being released to the buyer) in this transaction does not exceed what you would be willing to pay out for that real estate exactly as it sits today? What will your equity position be if no property improvements are ever done to the property?
Are you absolutely sure that no person needs to ask for a little more cash down payment, and or even some further real estate equity or more collateral to sufficiently secure the trust deed?
Never lend on a second trust deed on raw land. Unimproved raw land has no improvements to generate rental profit so if you were to lend against a second loan on raw land and subsequently had to foreclose, you would have to come out of pocket with additional money to cure the senior loan or lose your expenditure.
Can you always be reached the quickest by mail at the address of the listed record?
If there is more than one lender, it would be a good idea that an investor receives a deed of trust California power of attorney recorded “only for the purpose of enabling you to file a notice of default” in behalf of other beneficiaries absence so that if circumstances arose such as one associate is out of town, out of the country, or perhaps unavailable.
Also, better not permit a corporation or partnership to act alone as a borrower without requiring the corporation’s owner(s) to also personally sign for the loan again individually on a guarantor form. A debtor’s motivation to walk might be hindered if his own personal name is on there alongside with the company. It also separated the borrowers you want from those you don’t.
Regarding tax service, do you want a service to inform you if back taxes stack up on a property whose equity is securing your investment funds?
If the deed of trust California investment has met the above guidelines, then the final judgement call should be easy.