1. What is a trust deed investing or private mortgage investing?
Trust deed or mortgage investing is the loaning of money secured to real estate at competitive rates of return. The real estate is actually used as collateral for the investment and secured by a deed of trust or a mortgage. A trust deed investor makes a higher return on investment and is secured by the borrower’s equity in the real estate transaction.
3. What is the yield?
Annualized yield will depend on the length of individual investment and the availability of a property for rollover. Some investments last for as little as three months and some may last for more than a year depending on the program you choose. In trust deed investing, one can typically earn 7%, 8%, 9% or sometimes even as much as 10% or 11% depending on the opportunity. These returns are annual percentage returns. Since these investments are typically shorter term (6-12 months), the principle then becomes available once again to rollover to another property investment if that is of interest to the investor.
5. Do you pool my money with other investors?
Under a 503 regulation d offering The Legacy Group has launched The Legacy Opportunity Fund 1, as an opportunity for our accredited investors to participate in higher than normal returns as well as gain a diversified portfolio through the diversification of asset classes. The Legacy Group also offers opportunities for unaccredited investors with competitive returns. As in any of our transactions,, only licensed brokers are used to comply with federal law.
6. Can I use IRA funds?
Yes! In fact, trust deed investing is an excellent way to diversify your retirement portfolio and to leverage these types of accounts. Please be sure to contact your plan representative, as various IRAs have different rules and regulations. In addition, there are ways to avoid UBTI with investing as debt verses as equity. IRS rules are complex and we encourage you to seek professional counsel if you have any questions.
9. What are points?
Points are short for percentage point, and they are typically fees associated with a loan transaction. They are also called discount points or origination fees. They are a percentage of the loan size and are the fees that the broker charges in a hard money loan transaction. For example 4 points on a 100,000 loan is $4000.
10. Do you do second and third position trust deeds and mortgages?
The Legacy Group will invest in first and second positions only, up to the 65-70% loan to value, as we feel this offers a large cushion of equity to secure the investment. The Legacy Group does not invest in third position deeds of trust.
11. 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, preparing year-end tax documents for the IRS and franchise tax board, maintaining adequate borrower insurance coverage, and coordinating foreclosure proceedings if necessary.
12. Who in my network might be able to advise me on these types of investments?
Seeking objective professional advice is always recommended, so we suggest you check with your tax advisor, financial or retirement planner, accountant, and/or your attorney.
13. Who can invest in trust deeds and mortgages?
Private individuals, corporations, pension plans, custodianships, LLCs, qualified retirement accounts such as IRAs, Roth IRAs, HSAs, and SEP accounts. Some retirement amounts have limits, so please check with your custodian or agent.
14. Do you require hazard insurance on the property from the borrower?
Yes. We also require an expanded policy to cover builders risks including construction hazards and vacancy hazards (such as vandalism and frozen pipes). We require coverage in the full amount of the loan or replacement guarantee.
15. Will there be a complete Opportunity ProfileTM
on each property?
By the time we decide on a property for funding, we will have already had an independent valuation (appraisal) completed for the property along with an approval from the Underwriting Loan Committee, which includes feasibility study and project demand research. These evaluations are available upon request.
16. Why would one of your borrowers get money from you instead of the bank?
Typically it is because the project doesn’t qualify or the borrower needs the money faster than a bank can perform. Bank approvals are slow and tedious. Private lenders like The Legacy Group are not constrained by the same set of rules a banking institution imposes, since they are federally regulated. Since our loans are for non owner-occupied projects the loans can get closed within days, not weeks or months.
Contact us at (719) 578-8387 if you have any further questions you would like our team to address.