What Do Trust Deed Investment Companies Do?

Posted on Jan 27 2015 - 10:24pm by Lance Edwards
Troy-Fullwood-Pinnacle-Investments

Troy Fullwood

By TROY FULLWOOD – Trust deed investment companies need great communication to be able to effectively mediate between borrowers and investors. Part of good communication is full communication and transparency in your activities.

In this article, we will discuss the nuts and bolts of how trust deed investment companies service and collect the loans.

Backstage Blues

In a trust deed investment, the real estate property takes center stage.  The property is the star, your key to earning double-digits interest.  Learning about the property is the glamorous part of the investing process.

Equally important to the investment, however, are a host of behind–the-scenes actions that enable the show to go on and those interest checks to land in your mailbox or in your account.  While you’re cashing the interest checks, a trust deed investment company takes charges of the many behind-the-scenes, time consuming, mundane yet-necessary details.

For instance, your trust deed investment company will calculate the monthly interest and will bill the borrower.  It will handle the many administrative tasks necessary to secure the borrower’s collateral.  The company will collect interest payments and will verify the appropriate amounts due to you and to each investor.  Most importantly, the company will make certain those interest checks land in your mailbox-or in your account-on time.

Your trust deed investment company will also generate all the necessary tax information on each of your investments at year end.

Seeing Is Believing

Once a lender offers money to a borrower, how can that lender be certain the borrower won’t take the money and use it to start a sanctuary for elephants rather than using it for the intended purpose-to build a retail center, let’s say?

Here’s another important role a trust deed investment company plays in this production.  Representatives from the trust deed investment company makes site inspections of the property in question.  In fact, the loan money is often fed to the borrower in stages, as the project progresses.

Site visits allow the trust deed investment company to nip any problems in the bud, before they’re in full bloom and more difficult to fix. This is just another safeguard that these organizations put in place to protect your money. In fact, the trust deed investment company does pretty much all the homework when it comes to the property, and checking that ‘their’ and ‘your’ new development, or investment, is coming along as it should.

They do things like reading the appraisal of value, looking at all the bits and pieces, making sure all the clauses that need to be there are there, checking the tax assessors opinion of value compared to the realtor’s assessment of the property value, researching the actual purchase price of last time the property was sold, and then comparing it to similar purchase prices of the time, and finding out the standard amount for rent in that area if it is to be a property which generates rental income.

Phew! I’m sure you will nearly have run out of breath reading that, as I did writing it. How do those trust deed investment companies do it?