Trust deed investing involves multiple people to make an investment work seamlessly. With normal real estate investments, you may take on the venture by yourself if you feel up to it. Sometimes you may need a partner that is willing to invest the time and money with you. However, with trust deeds there are multiple parties that you should be aware of.
The first thing that you must realize when you decide to take on trust deed investing is that you will be dealing with people whether you like it or not. Certain processes or plans may take longer than expected or you may have to jump through a few more hoops before you are able to reach your finish line.
The big three that you will most likely fall into will either be; trustee, borrower or lender. The borrower and lender should be fairly simple to distinguish for the novice investor. The lender hands out the loan. This will usually be a hard money lender or a financial institution. Borrowers are the people or partners that need funding. Where some people get confused is the trustee. In California, by definition, this person holds the deed of trust for the security of the loan. In the event of a foreclosure, they are also giving the authority to sell the property to recoup money lost from defaulting.
In trust deed investing, the trustee has a lot of importance.
As stated before regular commercial real estate ventures only involve two parties. When a trustee is included you are able to have a mediator that is able to maintain the property title. This also means the trustee is the sole owner of the actual property unless the borrower was to default on their loan. The law requires the trustee not be affiliated with either the borrower or the lender. That being said, the trustee and be a single person, group or even a business.
Neutrality is one of the biggest things a trustee needs to be worried about. Throughout the entire the agreement it is the trustee’s, job to make sure that they do not favor one party over the other. This can cause friction between everyone if the trustee were to favor the borrower’s situation and vice versa. The trustee is also responsible for making sure the title of the property is transferred to the borrower after the payment period is completed.
In trust deed investing the trust also handles the foreclosure.
Of course, the trustee cannot officiate the hearing if there was a trial that was to take place. It is the job of the trustee to handle the Notice of Default. Many people think that this duty is given to the lender, not true in this case. It is the job of the trustee to take care of the foreclosure from beginning to the end. Most of the time it is the trustee’s obligation to get as much revenue from the sale of the property to make sure the lender’s loss is covered.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.
Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.