What is a trust deed investor?
A trust deed investor is a person seeking a competitive rate of return on their investment. Trust deed investing is the lending of money with real estate as collateral. Loans are secured by real estate. A trust deed investor makes a higher interest yield than would typically be obtained by a regular bank and is secured by the borrowers equity in the real estate transaction.
How much money do I need to start?
Verdeo Capital requires an initial $100,000 minimum investment.
Can I use IRA funds?
Yes. Verdeo Capital actively places funds from IRAs, Self Directed IRAs, Roth IRAs and several other retirement accounts. Trust deed investing is a fantastic way to diversify your retirement portfolio and to leverage these types of accounts.
However, please contact your plan representative as all IRAs have different rules and regulations.
What’s the typical property you loan on?
Verdeo Capital lends on California real estate only.
What is the yield?
Annualized yield will vary depending on market conditions.
Do you pool my money with other investors?
The majority of Verdeo Capital’s loans have one investor. On occasion, Verdeo Capital has engaged Fractional Participation for larger loans. Verdeo Capital prefers to place one investor per property so that they have more control over their investment.
Is it safe?
Every investment has risk. However, unlike many other investment vehicles, trust deed investing with Verdeo Capital ensures you own a first trust deed on a specific California property. This means you have ultimate control and a physical asset.
Once I’ve committed to be a private lender, what should I expect?
To find out more how the trust deed process works at Verdeo Capital, click HERE.
How much do you loan out?
Verdeo Capital has brokered loans from $50,000 to over $2,000,000 with most of our loans in the $50,000 to $450,000 range.
What is your typical loan to value?
Verdeo Capital loans up to 65% of the property value. Verdeo Capital considers everything from property location, repairs needed, to investor experience when determining total loan amount.
What are points?
Points are the fees Verdeo Capital collects for acting as broker in a private money loan transaction.
How is it that I, as an investor, am able to achieve such a high rate of return?
The private money notes that we are currently recommending are typically averaging 9% annual interest. This opportunity is afforded due to current market conditions and is subject to change in the future. Regardless, once the private note has been recorded, the interest rate and all other applicable terms and conditions are permanent and can not be changed until the obligation has been settled or modified in writing and the lien has been reconveyed.
Why would anyone borrow money at such high interest rates?
Typically, the borrowers that are interested in obtaining a Private Money Note have fewer financing options. For one reason or another, they may not be able to obtain conventional financing. Or, they may need funding immediately or for only a short period of time and want to avoid the “red tape” typically involved in conventional financing. Regardless of their situation, our goal is to provide our investors with an “above market” annual rate of return while incurring as little risk as possible. Based on current demand and market conditions coupled with the fact that these notes are being funded by Private Investors (as opposed to institutional), we’ve found that 9-10% is an appropriate rate for these types of private money notes.
Do you offer 2nd and 3rd trust deeds?
No. Verdeo Capital only offers first trust deeds on all of our investments as we feel this offers a more secure investment with much lower risk.
What does loan servicing include?
Loan servicing includes the back-office tasks of collecting payments from borrowers, disbursing payments to the investor, mailing required notices and statements, year end tax documents for the IRS and franchise tax board, maintaining adequate borrower insurance coverage, and coordinating foreclosure proceedings if necessary.
Who in my network might be able to advise me on these types of investments outside of Verdeo Capital?
Having an excellent team is always important and we suggest you check with your tax advisor, financial or retirement planner, accountant, and/or your attorney.
Who can invest in trust deeds?
Private individuals, corporations, pension plans, 401Ks, custodianships, LLCs, retirement funds, IRAs, Roth IRAs, Self-Directed IRAs, and SEP accounts. Some retirement amounts have limits so please check with your custodian or agent.
Do you require fire insurance on the property?
Yes and coverage must be sufficient to cover the loan amount and/or replacement costs.
Will I be given a complete profile on the property?
By the time we present the property for funding, we ve already had an independent appraisal done on the property. We ll send to you a copy of that appraisal along with the address for you to view the property.
How often do I receive payments as an investor?
Payments are distributed monthly to all investors. Upon receipt of payment from the borrower, the Loan Servicing Organization then issues payment either by way of check or direct deposit to the investor accordingly.
How are these payments taxed?
Generally, interest payments are taxed as ordinary income. An exception to this would pertain to funds that are provided by way of a Self Directed Individual Retirement Account (IRA). Verdeo always recommends, however, that our investor clients contact their Tax Advisor (CPA) for accurate answers to this and any other tax related question.
If foreclosure proceedings are required, who is responsible for paying the legal costs associated?
It is important to remember that the Private Note is between the Investor and the Borrower. While Verdeo will be making an underwriting recommendation, it is important that the investor should also perform any / all due diligence needed prior to making a final investment decision. Once the note has been recorded, it is Verdeo’s intention to stay involved in the transaction from beginning to end in order to provide ongoing counsel and ensure full investor satisfaction. If additional costs are incurred in order to pursue necessary legal action, these costs would be at the expense of the investor. It should be noted that, in many cases, these costs are recovered in the bidding process of the foreclosure proceedings.