What is a trust deed investment?
A trust deed investment is a real estate-backed loan in which you fund a private mortgage or trust deed. The loan is secured by a deed of trust recorded against an underlying property, giving you a legal lien on a tangible asset. For the duration of the loan, you earn monthly interest payments. When the loan matures or the borrower repays, your principal is returned.
What’s the difference between a trust deed and a mortgage?
A mortgage is a two-party arrangement between a borrower and a lender. A deed of trust involves three parties: the borrower (trustor), a neutral third-party trustee, and the investor (beneficiary). In California, deeds of trust are the dominant structure because they allow for a faster, non-judicial foreclosure process - providing meaningfully stronger protection for the investor in the event of a default.
Are Trust Deed Investments Safe?
As with any investment, trust deeds carry inherent risk - including the potential loss of some or all principal. They are not insured by any government agency. However, because each investment is collateralized by real property, there is a tangible layer of security that most other investment vehicles cannot offer. SO-CAL Capital manages risk through conservative underwriting, capping all loans at 70% LTV, and rigorous deal selection.
Can I use my IRA or 401(k) to invest in trust deeds?
Yes. Self-directed IRA and 401(k) account holders can invest in trust deeds through a qualified self-directed custodian. This is a widely used strategy for generating tax-advantaged passive income within a retirement account. Contact SO-CAL Capital to discuss how your specific account structure could participate in trust deed opportunities.
What happens if a borrower defaults?
SO-CAL Advisory acts as foreclosure trustee, meaning we manage the full enforcement and recovery process on your behalf if a borrower defaults. The recorded deed of trust provides the legal mechanism to enforce the lien. Our integrated advisory and loss mitigation services are specifically designed to protect investor capital through even the most complex distressed situations.
What is the minimum investment amount?
Minimum investment amounts vary by individual opportunity. Contact the SO-CAL Capital team directly for information on current availability and applicable minimums for open transactions.
How is a trust deed investment different from a REIT?
A REIT is a pooled fund - often publicly traded - that aggregates capital across many properties and may be subject to stock market price fluctuations if publicly traded. A trust deed investment gives you direct exposure to a specific loan secured by a specific property, with returns not correlated with public markets and a known, physical collateral asset. Note that trust deed investments are not liquid and cannot be readily sold or transferred but the investor has discretion to choose which investments they fund.
