You need to know the following to make sense of what I do:What is a trust deeds business? It sounds interesting.
Trust deeds are a lien that a lender (bank) puts on real property to secure their loan -- sometimes incorrectly called a mortgage. Sometimes private parties "carry the paper" on a property they sell by creating and recording a trust deed. Other private parties loan money on real property secured by a note and trust deed -- which is known in the RE business as "hard money lending". The trust deed is the written agreement that is recorded against the title of the real property.
What I do is I identify trust deeds held by private parties. I make them cash offers to buy their trust deed at a discount. They assign their interest to me. I collect the payments from the person who "owns" the property until I am paid off. I'm basically acting as a bank financing the property. I only buy 1st trust deeds -- no seconds. I go through a formal escrow and I get title insurance each and every transaction. Sometimes I must foreclose and take back the property.
The reason that I'm successful at this business is that I started in real estate 44 years ago. I am a licensed RE appraiser and I was a broker for 30 years. Yes, sometimes I have made mistakes, but that is rare. And I can usually make a corrective move to fix problems. My odds of making good deals on the right types of property are very high. I'm like a good bird dog. I sniff out my deals.
Here's an example. I bought a trust deed 4.5 years ago on a little cabin for $15,000 cash. I have received small monthly payments. One of the "owners" is having problems with the other "owner", so he's asked to buy my note and trust deed. The face amount (amount currently owed), including interest, is $14,000 (RD). So, I'm selling it to the guy for $14,000. I've made $8,000 (RD) over the last 4.5 years from both face interest and imputed interest from this little trust deed.
It's a business that takes both cash and expertise. It also takes a lot of time to run down the prospects and then contact them. I get lots of no's and then those few golden yes's.
Have I told you more than you wanna know?
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