trust deed investing

TheBayview Holdings LLC

Method

OFTRUST DEED

INVESTING

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Why Become A Private Lender?Within the last 12 months, over a Trillion dollars have been lost in the market.

Many folks have to start over just about when they thought their retirement was safe.

Their 401K’s became “201K’s” or worse.

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Huge companies have gone under, some over a hundred years old and more will follow.

The national deficit is higher than anytime in America’s history and will continue to climb for years.



Unemployment has topped 10% in many states and will escalate much higher before it stops.

Residential and commercial development has come to a screeching halt and funding has dried up even if the demand were present.



Invest Only In First Mortgages

A lot of private investors have ended up walking away from properties with substantial equity simply because they either got discouraged or they ran out of liquid funds to keep the first mortgage current.

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Commercial vs. Residential Mortgages

A good home loan is probably a safer investment than a good commercial mortgage – but all of the good residential mortgages are taken.

In contrast, the small commercial mortgage loan market is a niche that gas been traditionally neglected by the big banks.



Invest in Mortgages Secured by Commercial Property

A first mortgage loan of only 65% to loan-to-value to a strong and experienced borrower with good credit secured by his small office building, is a far safer investment than a second mortgage loan of 80% loan-to-value to an insolvent credit flake secured by his home



Don’t be Afraid to Invest in Fractionalized Loans

When you invest in fractionalized loans, you can invest in any size loan that is offered.

Therefore you can choose the safest deal from among dozens of large and small loans.



Importance of DiversificationIf you stubbornly insist on owning the entire loan yourself, you may be tempted to invest in a lousy loan simply because the loan is small.

After all, there aren’t a whole lot of $20,000 loans floating around these days.



Importance of Having a Qualified Borrower

Owning 10% of a $200,000 first mortgage to a $3 million net worth borrower with perfect credit secured by a fully-leased strip center is probably a far safer investment than $20,000 second mortgage to some insolvent credit flake secured by his home.



Control Your Risk EasilyOf course, you probably wouldn’t want to invest in a fractionalized second mortgage for fear that one of your partners may fail to pay his fair share of the first mortgage payments.

Stick instead to first trust deeds, where any cash call is likely to be modest.



Safety in NumbersWhen you invest in fractionalized loans, you can choose your trust deeds on the basis of safety, not simply because they are small enough to own all by yourself.



Diversify Your Trust Deed Portfolio

If you invest your entire trust deed portfolio into a single $90,000 loan, guess where the epicenter of the next big earthquake is going to be?

The wise trust deed investor will instead diversify his $90,000 portfolio among at least six different first trust deeds.



Diversify Your Trust Deed Portfolio

Even credit worthy borrowers occasionally fall a few weeks behind in their payments from time-to-time.

If this should happen to you, you’ll sleep better at night if you have only $15,000 into the delinquent loan and your other five loans are still performing.



Diversify Your Trust Deeds by Region

Many old-time trust deed investors used to only invest in trust deeds close to their home.

Then a lot of private investors in San Diego were slaughtered when the naval base closed and both Lockheed and Hughes left town.

And what if you lived in L.A. and had all of your trust deeds there when the Northridge earthquake hit?



The wise trust deed investor will own one deal in Sacramento, one in San Jose, one in Fresno, maybe two in L.A. and one in San Diego.

While an earthquake, plant closing, mudslide or base closing might hurt one investment, the rest of your trust deed portfolio could easily survive.



Diversify Your Borrowers Even a great borrower can go off the deep end after a divorce, so never make two loans to the same borrower.

You should also pick borrowers in different professions.



If you had made six loans to six medical doctors, your portfolio might be in trouble right now.

Stay away from developers, Realtors and mortgage brokers as borrowers.

The real estate cycle often forces these borrowers to become unreliable.



Don’t Be Afraid to Invest Long Term

Your mortgage broker can seldom compete against a bank based solely on rate; but he can often bring you a great borrower if can offer the borrower a ten year loan.

Banks prefer to make only five year loans, and these balloon payments often scare away good borrowers.



Staggering Maturities You can still maintain reasonable liquidity if you stagger your maturities and spread your portfolio out among six or more loans.

Statistically, the typical private money loan pays off within five years.



Good Underwriting PracticesThere is a common theme among these recommendations.1.Credit Quality2.Capacity to Repay3.Collateral (the “Three C’s” of Underwriting)



The Importance of DiversificationIf you want us to find you the safest possible deals, your yield demands must be reasonable, and you need to be flexible on location and term.

Always remember to diversify-diversify-diversify.



Invest in Trust Deeds Using Your IRA or Retirement Account

We’ll help you move it to an administrator who will allow you to invest your money into anything YOU WANT, not what they want.



Invest in Trust Deeds Using Your IRA or Retirement Account

It costs nothing to transfer but will take about 10 days. Once it’s done alert us and we’ll get you into a deal. All your interest is tax free in a Roth and deferred in any other plan.



Contact Us at:BAYVIEW HOLDINGS LLC

[email protected]

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trust deed investing

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