7. What to Look for When Evaluating the Security Property For A Trust Deed Investment?

Before investing in a Trust Deed ...check the loan-to-value (LTV) and Protective Equity.

LTV ... identifies the loan as a percentage of the property. Let us assume that the
loan amount is $650,000 and the property’s appraised value is $1,000,000 — the LTV would be 65%...Example:
650,000 ÷1,000,000 =.65 or 65%  The higher the LTV the greater the risk.
PROTECTIVE EQUITY is the difference between the value of the security
property and the loan. The greater the equity the better the investment

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