Thinking Outside The Box

Banks have been doing the same thing for many, many years – they have a rigid formula that loans must fit into, and because of the diversity of their operations and the need to make fairly standard procedures and rules, they tend to view the unknown with caution. Trust deed investment companies, on the other hand, are much more open-minded.

One of the reasons that investors go to investment companies (sounds obvious, huh?), instead of banks, for their loans, is that they know banks try to force loans to fit inside a tight box. In other words, every loan must fit a predetermined structure. If the loan strays outside those borders, it’s rejected. Say there is an investor who has an elephant phobia, and wants to build his house with special elephant protective features. He knows the bank won’t necessarily approve extra amounts on the loans for such an unconventional expense - but on the other hand, that investment companies are creative, innovative, and flexible. They would be more likely to approve the loan.

That’s the same reason why many real estate developers turn to trust deed investment companies rather than to banks. Loan policies at banks are set in stone. Trust deed investment companies, however, take a different approach. Remember when your kids and/or your grandkids grabbed a piece of play-Doh? Did you tell them what sort of creation they could sculpt with that rubbery piece of dough? No, you let them use their imaginations, shape it any way they pleased. Trust deed investment company loans are just as flexible. As long as we are dealing with a reputable borrower, one who has a good track record and who fits other criteria, we shape the loan to ensure that we-and most importantly, that you, the investor-don’t lose out on a good deal yet remain well secured just because the loan doesn’t fit “inside the box” of the traditional financial institution. Trust deed investment companies cheer the entrepreneurial spirit of borrowers.

Traditionally, real estate developers have had a difficult time prying money loose from banks. Often, the developers are seeking money for construction-in other words, they’re borrowing against something invisible. The borrower has a vision, complete with architectural plans and renderings, but all the bank officers can see is dirt. “Where’s our collateral?” they wanted to know.

Trust deed investment companies, on the other hand, see more than dirt. They see the developer’s vision and they know the chances are good that the successful developer will repay them. If not, they have ways of recouping the investment. Remember, the trust deed investment company can see the vision of something great on that patch of dirt – they know the same avenues that the borrower would have taken to complete the work, and they are quite willing to use those also. The work is finished, the money is made (possibly more than before, given that the investment company now takes all the profits, rather than just their margin of them) … and you have a fatter wallet or a fatter bank account statement. Or a big pile of notes to put under your mattress or up your chimney!