Trust Deed Investments
ABOUT
FK CAPITAL FUND is a private money lender arranging trust deed investments secured against residential and commercial real estate in California. Our combined experience in both underwriting and loan brokering gives us a distinct edge over some of the other options available to investors. We’ll prove our understanding of the industry from appreciation and depreciation trends to ‘true value’ which, at the end of the day, is best determined by the income approach.
UNDERWRITING
Generally, most of our loans carry a 7% to 13% note rate and are recorded as a first or second trust deed on the property(ies) being used as collateral. All loans carry title insurance, hazard insurance, and recent appraisals and/or Broker Price Opinions (BPO). We handle the complete servicing of each loan and you have the choice of reinvesting your payments or receiving them monthly. All trust deed investments are approved investments for IRAs or other self-directed retirement plans. We do all the paperwork. Our loans are business purpose loans only, based primarily on the equity in the property, but the personal details of the borrower affect the maximum loan to value and/or the note rate.
Finding choice trust deed investments can be a tedious job and successfully accomplishing it from your standpoint can be difficult. Using a trust deed investment professional team to find, structure, buy and service the loans can lower your cost, expand the marketplace for you, lower your risk, and increase your return. Our trust deeds are structured to reduce risk in several different ways. Contrary to most existing trust deeds and notes created by seller carry-back financing, trust deeds and mortgage notes originated by FK Capital Fund are specifically structured to address issues of risk that should concern all investors in today’s economy.
FK Capital Fund saves you time, money and effort by spending thousands of dollars every month to search for these lending opportunities, sifting through hundreds of loan scenarios just to find the right deal with a high yield, structured to reduce risk and improve the safety of your investments.
The decision on whether or not to approve a loan is primarily based on the amount of equity in the property. If the property has the required equity, adjusted for the current economic environment, FK Capital Fund will then measure and analyze the borrower’s characteristics and ability to repay the loan.
On top of handling all the servicing of each loan, FK Capital will facilitate the collection and foreclosure aspect in the event of default. Our strategy for underwriting each loan greatly reduces the risk of any loss. All local, state, and national laws in regards to fees charged are always strictly followed.
FUND STRUCTURE
The fund was formed to allow investors to participate in trust deed ownership as part of a collective pool, providing a number of key advantages over investing on an individual basis. The fund primarily purchases trust deeds (promissory notes secured against real estate) in California. The management team has a pragmatic underwriting philosophy, balancing high yield with safety in quality real estate collateral. Some of the advantages of the fund include:
DIVERSIFICATION
Each investor owns a proportionate share of every note in the fund.
HIGH YIELD
The note rate for each loan is targeted between 7% – 13%.
SECURITY
Each loan is secured against real estate. A lenders title insurance policy is obtained on every loan. The fund is named on the borrowers hazard insurance.
SAFETY
Each loan is targeted at a 65% loan to value or less (max 70% loan to value by exception).
QUALITY
Due to their volume and operating efficiencies, funds have access to better quality notes often not available to individual investors who are left with the scraps after funds have cherry-picked the best notes.
CONVENIENCE
Hunting for quality trust deeds can be a time-consuming process for the individual trust deed investor.
FLEXIBILITY
Investor can choose to reinvest monthly interest payments or take a monthly income.
LIQUIDITY
There is far greater liquidity than would be possible for individual trust deed investors.
EFFICIENCY
The fund is able to act more quickly to secure better notes, utilize greater resources, and better manage cash flow than individual trust deed investors. This ultimately results in superior consistency in generating returns.
Up to 65% LTV
At least 35% of value to offset potential declines in property value or to recover your investment. Generally no more than 65% LTV, but in certain extraordinary instances, exceptions are granted.
Prepaid Interest
Extra security with a portion of the loan proceeds held in escrow in case borrower experiences financial trouble. This feature is implemented on a case-by-case basis.
1st/2nd Trust Deeds Only
1st trust deeds offer superior control in the event you need to recover your investment and exit. 2nd trust deeds offer superior yield and are only offered depending on the terms of the first.
Rental Income
Cash flow from income producing properties can help borrower maintain payments or help investor offset loss of monthly payments.
Prepayment Penalty
Penalties for early repayment are added to the loan on a case-by-case base and are accompanied with different price and rate adjustments in order to compensate for reinvestment risk.
Shorter Terms
Terms range from 6 to 36 months. Each property is evaluated as if we’re purchasing the property ourselves at fifty to sixty per cent on the dollar.
To receive information concerning available trust deed investments,
please submit the requested information below:
Download RE 35 Trust Deed Investments: What You Should Know, a California Department of Real Estate Publication