Many ordinary people with money to invest are tired of the traditional options available to them in this day and age of ridiculously low interest rates and would love to invest in real estate but for some reason or another lack the time, the confidence or skill to move forward.
At The Retaja Group our clients not only buy real estate as tools of achieving their financial goals they loan other investors the money to buy investment real estate as private money lenders - and they do it without ever having to lift a pain brush!
This often overlooked vehicle is known as Trust Deed Investing and can simply be defined as when a private individual, such as yourself, loans the necessary money to an active real estate investor, through the professional services of a licensed real estate Broker - a la a Retaja Group, Inc.
Trust Deed Basics
While there are many versions of Trust Deed Investments it all comes down to an individual who loans their money that can come from a variety of sources including cash in savings, lines of credit or other credit lines and even retirement accounts.
In order to protect the lender, Private Money loans are brokered with the assistance of a California Licensed Real Estate Broker. As your broker, Retaja Group will find the borrower who wants to borrow private money for a real estate project. The next step is our careful analysis of the project - we understand whats good about this project and how the numbers play out. We'll package the opportunity and submit it, up to three different lenders who have expressed an interest in a project that's similar to the one we have. Once we have a meeting of the minds between the real estate investor and the Private Money lender.
Trust Deed Documents
There are two critical documents in any real estate transaction that is secured by a loan. The first is the TRUST DEED.
A Trust Deed is sometimes referred to as a Deed of Trust. Either way, a Trust Deed is recorded with the County Recorder and acts as proof that there is a loan on the property. Trust Deeds have a priority in California based on the sequence of recording with the County Recorder - in other words, the first Trust Deed is recorded in first position to any other deeds that may be recorded afterwards - regardless of the balance or the date it was executed.
The Promissary Note is the actual loan that is signed by the borrower and details the specific terms of the loan to include the interest rate, the payment schedule and all of the other terms.
Trust Deed Players
In a well orchestrated Trust Deed Loan there are going to be three players who are a part of the transaction and actually named on the Trust Deed. These three are in addition to the broker who arranges and oversees the process. More about the brokers role in another article.
The lender is referred to as the Beneficiary. This is the same role a bank typically holds in a more traditional loan. The beneficiary is often a private individual. At times it is a retirement account such as a self directed IRA. Many of our clients work with a firm that specializes in self directed IRA's. You can read more about them here.
The person (or entity) borrowing the money and making the loan is the Trustor. When the Trustor signs the promissory note and trust deed, they are promising to repay the loan according to the terms and conditions set forth in the promissory note.
The Trustee is a neutral third party that is named on the Trust Deed and has the power to initiate a non-judicial foreclosure in the event the borrower defaults on the terms of the note.
The Basics
What I have shared here is the mere tip of the iceberg. There is so much more that takes place - not that its complicated...it's just a unique process with checks and balances to protect all of the parties. For example, the most secure element we can add to every transaction is title and escrow - just like any traditional real estate transaction with a mortgage.
Every private money loan we broker for our borrowers and lenders is issued a title policy - typically by Chicago Title and the entire process goes through escrow. As your broker - we re just that - we bring people together to achieve a common goal and we get paid for our services - under no circumstances do we ever have direct control of your money.
If we bring a deal to you that meets your criteria and you decide to invest, then you deposit the money directly into escrow and escrow only pays the broker at the close of the transaction and only tjhe exact amount that is agreed upon by our written agreement, which is a separate document between the broker and the lender.
Keep Your Eyes Open
Please come back to this space on the web to find out more about private money lending and how the Retaja Group can help you receive a high return with minimal risk. Of course all investments carry a risk and cannot be guaranteed - but the greater the reis the greater the reward...unless of course you want to tie up your money at 1% in a certificate of deposit if what you really want is to feel secure.
If you want to read more of my articles on Private Money, please just follow this. link.
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