Investing in Real Estate

Real Property Ownership

Mortgage Notes & Deeds of Trust

Short Term Flip Projects <> Long Term Hold Properties

Land Banking <> Development


Real Property Ownership

Probably the most common and well known type of real estate investing is direct ownership. And the most common yet of that, is the single family home. Next would be an additional home or more owned as a rental property. Building from there is the multi-family duplex, triplex, 4 unit quad and then apartment building with 5 or more units. There is, especially when it comes to financing these types of investments, a very definite and non-crossable line in the sand between the 1-4 units and 5 units and more. Once you’re dealing with 5 units and more, it becomes considered commercial real estate for all intensive purposes. On the 1-4 unit properties, an owner can occupy any 1 of the units and it is still considered a primary residence and can be financed as such, with additional rental income to qualify for the purchase or refinance mortgage). There is the vast amount of money available for this inside the finance world with loan guarantees from such organizations as Fannie Mae, Freddie Mac and other agencies like USDA for more suburban/rural real estate. Even direct loans from the VA fit into this 1-4 unit category. But leave that world and you’re now looking at a very different source of capital to purchase or refinance those & not guaranteed by outside agencies or companies. With ownership you get the benefit of the tenants paying for all or most of the cost to own such a property and you get all the equity appreciation as (if or when) the property increases in value as well as paper right-offs like depreciation. The downside is repairs and maintenance along with tenant’s, property damage, leasing and property management. This is one aspect of real estate called active ownership. There is an option to this type investing which is more passive. One of those is partial ownership via partnerships, investment trusts, funds or syndications. There is still ownership interest at this level but other parties or persons handle all the usual ownership issues. Then the even more removed and passive level comes next. I’ll explain a bit about that below in the next paragraph.


Mortgage Notes & Deeds of Trust: (Passive Investing)

Today investors can expect annual interest returns from conservative ranging from 5-7% to aggressive in the 8-12% range.

Mirroring the actions of the old neighborhood Savings and Loans & Banks from days gone by at a time when banks made loans to their patrons from the money actually on deposit held by the bank. Those loans would be lent to qualified borrowers at a rate slightly higher than the amount they paid to savings account holders. Today small to large individual investors can seek a Broker or lender who identifies a borrower and analyses their borrowers real estate’s value coupled with the borrower’s ability to repay the requested loan payments. Then the loan is packaged for an investor who has the desire to put their money to work, without them having personally having to work at it beyond the origination.  The investor is provided a loan package for their review and the broker explains to the investor the circumstances of the loan and borrower.  If the investor feels comfortable and decides to participate, the broker will produce loan documents and the investor is named as the Beneficiary. Each month loan payments are made either directly to the lender but in most cases to a 3rd party servicing company who then in turn keeps records of the payments and takes a small servicing fee and then forwards the balance of the borrower’s monthly payment on to the investor’s bank account automatically. (Payments can also be sent directly to investor) Typically private loans are made with the length of time (term of the loan) that will run on average anywhere from 6 months to 5 years or more. There is one other main factor in private lending and that is the amount of the loan in relation to the value of the property. Known as loan to value (LTV). There are many variations, and specific types of loans such as fixed interest rate, simple interest (interest only), loans on land only (land banking) loans on single family multifamily and commercial real estate. Additionally there are single investor loans where only one investor is the lender of the complete loan amount and there are multi-investor type loans also called fractional ownership investing in mortgages. Some investors prefer to be the only investor so they have full decision making ability and others prefer a smaller piece of a larger loan so their risk is spread out over a variety of properties and not all on one for any particular loan. Private Mortgage Lending is also commonly referred to as investing in Notes & Deeds, Deeds of Trust, Real Estate Notes or just plain old Notes.

​Feel free to visit:  and download or read online a booklet called Trust Deed Investments ~ What you should know


Short Term Flip Projects <> Long Term Hold Properties:

Although a slowing market, there are still occasional good deals as flips where you can invest your money as a partner or silent investor similar to the paragraph above but have higher return on your investment. Call or email us today for more info about this program from the contact us page.

Longer Term Holds represents probably the largest group of real estate investors in the U.S. today. Having ownership or investing in real estate as both a cash flow and a long term capital gains move is traditionally safer and more consistent than any other type of real estate investing. Certainly there are other types of investments which can make great returns quickly but normally they come with greater risks such as investing in stock markets and business financing. The other side of that is, the likeliness of loss can also be quick and painful. If you’re thinking about or already know you want to have some real estate in your investment portfolio, call us today for a more comprehensive look into the types of properties and investments available to you. From sole ownership to shared and single family to multifamily, land to commercial.