1st Trust Deeds are yielding 10-14% with little risk to capital.
Orange County, California (PRWEB) April 17, 2013
Summerlin Asset Management, otherwise known as SAM, explains their new investment strategy and that when an investor combines the bond woes with the low yields in CDs and other fixed-income investments, many investors are left wondering where to turn. To better understand this, let’s look back at 2012. Last year, which may prove to be the last decent year in bonds for quite a while, the iShares Aggregate Bond ETF (AGG) closed the year up a hair above four percent while Bill Gross’ flagship PIMCO fund (PTTRX) ended the year with a total return of four-point-two percent.
According to Kish North, the VP of Capital Markets for Irvine based Summerlin Asset Management, "1st Trust Deeds are yielding 10-14% with little risk to capital."
Are Trust Deeds safe? For more information visit: http://www.1sttrustdeedsforsale.com
With any fixed-income investment, the first issue is always safety of principal. A trust deed is secured by an actual property, so the value of the piece of real estate determines the level of risk in a trust deed. A first trust deed (the focus of this Press Release) is a primary loan secured to a specific property. Now that the nation has seen most (hopefully all) of the real estate decline, “I believe the risk further decreases and that real estate values has eased to a point”, stated Shannon Derosby of Summerlin Asset Management.
What to Look for in Trust Deeds
The key factor of a trust deed is the loan-to-value (LTV) ratio. The lower the LTV, the higher the level of security. Thus a trust deed secured by a property with a 40 percent LTV is considered far more secure than one at 75 percent LTV. An investor owns the actual title, so they may have a well-secured investment which can throw off a significant amount of income.
Today, SAM is seeing first trust deeds with LTVs between 50 and 60 percent, meaning the property in question would have to drop in value by half (from today’s prices) for there to be risk due to the value. That is a level of decline which has almost never occurred in history. Then SAM adds in a second layer of protection which is called a Buyout Agreement. It is a contract whereby an investor can get their money back if the borrower defaults on their note. This is something unique and most trust deeds out there do not have this option, so the investor must ask for it. Adding a Buyout Agreement to an already safe trust deed makes it a perfect choice for those who are most concerned about safety of principal.
Based on the current lending and real estate environment, it is not unusual to find first trust deeds with yields of seven to 11 percent. Most 1st Trust Deed Investors earning 10 to 14 percent on what investors agreed was a very safe investment. Each trust deed is unique. Since each trust deed is a stand-alone investment, nothing can replace careful due diligence and research to understand the pros and cons of that specific trust deed.
One company leading the way in the 1st Trust Deed Investment space is Summerlin Asset Management. To learn more information contact Shannon Derosby at (855) 726-6683 or by visiting their website at http://www.investinsam.com