Why Invest With Consortium?
Consortium Equity offers individual investments in collateral-backed real estate loans. Investments typically range from $50,000 to several hundred thousand and many times it takes a handful of investors to fund one trust deed.
As a condition of funding each loan we require a full ALTA title insurance policy to protect your investment. This assures the deed of trust is in first position and has priority over any mechanics liens or other blemishes that may arise on title.
Our investors receive regular interest payments throughout the loan term as they are paid by the borrower and collected by a licensed, bonded and insured servicing company. These payments are automatically deposited directly into an investor’s bank account and monthly statements are provided by e-mail.
Investments in these Trust Deeds are funded on a deal-by-deal basis completely at your own discretion. In other words, this is not a “fund” in which Consortium decides where to invest your capital.
Loan Example –
Investment Property Purchase Price – $650,000
Borrower down payment – $250,000 resulting in loan amount of $400,000
Note Rate to Borrower – 9.75%
Rate to Investor – 8.0%
Interest Spread to Consortium Equity – 1.75%
In this example we may offer four $100,000 blocks or one investor may choose to fund the entire loan amount of $400,000.
Any savvy investor knows that diversification is critical to any portfolio. With historically low bonds yields, the stock market near all-time highs and increasing volatility, Trust Deeds offer diversification and above-market returns. Further diversification can be achieved by investing a sum over four different transactions.
What To Consider
The knowledge, experience and integrity of the company facilitating the transaction are crucial elements to a successful Trust Deed. Consortium Equity’s principals have thirty combined years in the mortgage industry, funding private money deals since 2003. Our risk-managed approach to each deal allows us to be creative, while always keeping the protection of our investors’ capital as top priority. Consortium is licensed under the State of California Bureau of Real Estate.
The experience and reputation of service providers such as escrow, legal team, appraisers and loan servicing are also vital. Consortium is partnered with some of the best in the business to assure seamless transactions with rock-solid security. The core group of service providers are bonded and insured, and our preferred escrow company is licensed under the Department of Corporations. Further information can be obtained by clicking the links at the bottom of the page.
Finally, protective equity in the secured real estate is critical. That is the difference between the liquidated value of the property and the balance of the loan. Significant protective equity is inherently safer for the trust deed investor, but can also help the borrower to liquidate the real estate quickly to avoid default.
An investor should understand the basics of Trust Deed investing and how it relates to one’s overall investment goals. Although secured by real estate, a trust deed does not appreciate or depreciate, unlike the property itself. Instead, it is intended to provide a consistent stream of payments at above-market rates without the volatility of a stock or mutual fund.
How to Invest
The State of California requires us to obtain form RE 870 Investor Questionnaire from all Trust Deed investors. Please contact Consortium by phone or e-mail to receive this two-page questionnaire.
Once we receive the 870 we will have initial discussions regarding your specific Trust Deed preferences. Residential vs. commercial, locations, Loan to Value and dollar amounts are examples. We then e-mail you scenarios that fit these criteria.
We provide an overview of the transaction including property information, borrower info and credit scores, rate and term of loan, LTV & GPE, loan purpose and borrower exit strategy. We can typically gather additional information to satisfy investor requests.
The “mechanics” of funding the transaction can be explained in detail, but it is important to remember that all monies are wired directly to an independent and bonded escrow company, and your interest is recorded and insured as a deed of trust on title.