Commercial Trust Deeds
The new lending paradigm has created outstanding opportunities for Trust Deed (TD) investors. Astute, accredited investors have been finding superior returns in real estate lending for years. Today, new lending standards have for the most part removed small commercial banks from the picture and larger institutional investors are still around but tend to avoid the $1 to $5mm lending range as the due diligence costs as a percent of return are just too onerous. Niche lenders (small private lenders) have come in with lending terms that are not inexpensive, but given what some see as the greatest opportunity since the depression in terms of real estate prices, the availability of such financing makes the terms seem downright reasonable!
Sophisticated investors seek real estate TD’s as a component to a diversified portfolio. Other more speculative investors actually use this avenue to acquire their own style of “distressed” real estate and they have an instant alert system to when the property may become available as the mortgage payments are made directly to them. Selecting property to loan on may include a possible acquisition component for these speculators.
While loan underwriting criteria may be fundamentally similar to general commercial lending (public lender) standards, we employ enhanced measures of due diligence and added levels of collateralizing a loan. Public lenders are reluctant to “cross” collateralize a loan and we often do. This method of further securitizing our loans leads to substantially more safety to our clients. In some circumstances it may lead to further opportunity to seize a desirable real estate portfolio. Despite this added security for our clients, we still offer substantial returns on investment (ROI). With lending rates starting at 8% and up, and with loan fees (points) of 2-5% depending on the property, the LTV, the debt service coverage (DSC) the term (length) and other factors, we can usually guarantee an investment return to our clients in the 10% range for terms of less than 3 years and more for longer term investment.
"Due and Payable"
Given the current environment for “due and payable” clauses coming up on a wave of existing commercial loans, we have an extraordinary opportunity to place additional investment capital in secured TD investments. These can be tailored to your specific investment profile and suitable for most investors. Call us today for a detailed plan, customized for your personal needs and our current offerings. We offer periodic seminars and personal meetings to further discuss with our clients and their representatives, the specific merits of our opportunities. We look forward to meeting you!