This is sometimes dressed up for investors by calling it; ‘future value investing’ or ‘specific-demand collateral’ this is the highest risk Trust Deed investment available to investors. The investment is technically secured (investors have a recorded Deed on land with an APN number) but for all practical purposes this is a speculation play and should be treated by all parties as such.
In any non-cash flowing property Trust Deed opportunity; investors are recommended to underwrite to the payment ability and reserves of the actual individual borrower, market scarcity (speed to exit) and reasonable value – which is still a guess. Investors will need to know substantially more about the person behind the loan as there is not any reasonable expectation typically for any cash flow on the property to support the debt (Deed of Trust). Multiple personal guarantees are a normal part of this type of loan to aid in the protection of the investors invested capital.
If this fits an investors needs; the yield received should be substantially higher than normal market returns and the access to the borrowers qualifying information closely reviewed periodically with reserves in place. Ultimately; any funds used for land Trust Deeds should not be needed at all by the investors for very long time horizons and the investor should have the wherewithal to carry the taxes and insurance and sales commissions in the event the borrower is unable or unwilling to pay.
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I am the CEO of EquiAlt: real estate based alternative investment firm with activities in equity, debt and private equity. Since 2008, EquiAlt's management has demonstrated a high level of competence in hundreds of distressed asset transactions, recapitalized companies while lending on landmark Las Vegas projects.
We understand that there are several strategies and goals in the area of real estate investing. Based on our experience, we offer education and offerings that are truly investment grade. Available products for investors range from totally passive to the traditional active.
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