At the simplest level, trust deed investing is when an individual lends money to a borrower through the services of a broker. The source of this money can be from savings, credit lines, or retirement accounts. The broker finds the borrower who wants the loan, and the private party with the money provides the funding.
Trust deed investing is a great way to diversify an investment and/or retirement portfolio and can provide an extremely safe investment with a high rate of return.
Evoque Lending has tens of millions of dollars of trust deed investments working every day and every dollar of it comes from people, organizations and non-profits who have funds to invest and have taken the time to understand the benefits of being a private money lender. We have many trust deed investors and they fall into several categories. Below are just a few of the individuals and organizations we currently work with:
1. Retired individuals: This group of trust deed investors wants a high yield return and absolute safety.
2. Preparing for a comfortable retirement: This group of trust deed investors is conservative and is preparing for retirement.
3. Busy professionals: Lawyers, doctors, dentists, bankers, wealth managers, city government employees and numerous other professionals who are busy earning high incomes.
4. Inherited wealth: This group consists of individuals who have inherited substantial sums of money.
5. Non-profits and endowments: In recent years, non-profits have seen declines in their endowment funds as well as the amount of giving to their organizations as the economy slowed. Many will be tempted to take extraordinary steps to make up for lost returns, which can be dangerous and risky. Trust deed investments provide a great option for non-profits.
6. Wealth managers: Individuals in charge of managing large sums of money for wealthy individuals come to us to further diversify their clients, investment portfolios through trust deed investments.
Yes. Several retirement accounts are eligible for trust deed investing. Some retirement accounts have restrictions so it will be important to check with the custodian or agent managing your funds.
Evoque Lending’s private lending formula and philosophy is to originate well underwritten and well secured quality real estate loans while taking advantage of the flexibility afforded through private money lending. Our investment philosophy when evaluating and underwriting a potential loan opportunity takes the following questions into consideration:
“Can the client pay?”
“Will the client pay?”
“If the client doesn’t pay, are we OK?”
1) “Can the client pay?” Does the borrower have the ability to make the monthly payments for the loan we are funding? What are the details regarding the borrower’s income, job position, stability, overall financial standing, including: assets, liabilities, and net worth. To verify borrowers’ capacity to pay, Evoque Lending requires that the borrowers state their income on the loan application. In many cases we include tax returns, bank statements and verification of cash deposits or other assets.
2) “Will the client pay?” Often times, borrowers show they have the ability to pay; however that doesn’t always mean they will pay. The borrowers’ character and desire to pay are based on their past performance in handling credit. Evoque Lending runs a complete credit report providing payment history on existing loans including the number of late payments and credit references to verify the borrowers’ character and desire to pay.
3) “If the client doesn’t pay, are we OK?” This is the MOST IMPORTANT criteria of our underwriting guideline! The collateral is the backbone and security of all of our loans. Evoque Lending is a direct equity lender. The market value of the property is critical in Evoque Lending’s decision in making any given loan. Our policy is to lend only up to 60% Loan To Value (LTV), requiring at least 40% protective equity in the property. To verify the market value of a property, Evoque Lending requires an appraisal to be completed by an approved independent appraiser. We tailor each loan to meet our investors’ criteria before we send the deal to be reviewed. After we do our due diligence, we present our investors with the details of the loan and an appraisal of the property. Even though we provide financing for every type of property in the market place, our investors have the option to choose what properties they would like to invest in so you will only see deals which meet your specific criteria. We only accept a small fraction of the deals that come to us so when the deal is presented to our investors it will carry with it the highest standards.