Trust Deed Investing 101 | Presented by LBC Capital - YouTube

hi guys boris dwarfman here from lbc capital  income fund i just came back from a great  

conference in newport beach and looks like  everything's opening up the conferences  

uh about 250 people it was good to see  everybody out there and it was good to be out  

looks like lakers just open staples center  we're going to have 10 uh spectators uh for  

now and they're going to raise that up to 50 uh  please subscribe to my channel i've been getting  

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now today i want to talk to you about trust  deed investing this is a very intro trusted  

investing 101 uh introduction uh for people that  heard about it but uh they don't know what it is  

so what is trust deed investing or investing  in hard money becoming a lender on a note

uh why invest in hard money why invest in trust  deeds how to do it um what are the qualifications  

of the investors and uh uh what are the  alternatives in investing or again how to do this  

and why us you know this is what we do so uh  trusted investing um our investors basically  

become lenders on real estate you invest in trust  deeds uh at least in california they're called  

trust deeds so your typical scenario somebody gets  uh buys a property for a million dollars they have  

half a million dollars they need a loan for 500  million they either don't qualify or don't have  

enough time to close so they cannot go to the  bank that's what private lenders private investors  

private fund that's where they come in and they  hold the trust deed secured by real estate so  

basically you're becoming a lender in a sense  you do everything that bank does but on different  

transat different type of properties different  type of transactions um and uh you're becoming  

a lender that's really what trustee investing  is trustee lending or hard money landing on the  

flip side you guys have investors uh that become  borrowers these are your developers these are your  

uh multi-family investors these these are your  fix and flippers this is the other side of the  

of the equation so you got trustee lenders and  then you have borrowers on real estate okay

why invest in trust deeds why invest in anything  you get you get return on the investment  

that's as simple as that and  you're diversifying your portfolio  

where are you guys investing uh stock market  bond market bitcoin reddit stocks gold

trust deeds their big big part of of the  comprehensive diversified investment strategy and  

up to recently this was only reserved for seven  eight million dollar seven eight figure investors  

only for big boys uh individuals family offices  hedge funds uh you know we're talking about five  

ten million dollar plus you cannot uh you know  just give one loan for two three hundred thousand  

you have to be diversified so uh simple you invest  for diversification you invest for yields how to  

invest it so uh number one uh again this is 101 so  you need to know what you're doing uh or you need  

to find proper partners to do this so there's few  ways of investing in trust deeds one you become a  

individual investor in trust deeds using a broker  brokerage firm so the broker sends you a deal  

you underwrite it you value it you present  your broker with the criteria of geographical  

preferences risk preferences property types  you may only feel comfortable with single  

family invest properties or commercial uh you  may want to finance wheat growing facilities  

uh you sit down with your broker and you create  your own comprehensive strategy this is this is  

very hands-on and you really need to understand  what you're doing also like i mentioned before  

you have to be diversified uh preferably  by geographical location by property types  

and most importantly you cannot just  do a loan for for one for one note  

like we'll have what you do one uh the person  will default and uh you'll be waiting for it to go  

through bankruptcies whatever right so um i would  advise anybody looking to do an individual game  

uh to have enough money to do at least uh 10 trust  deeds so figure average loan amount in california  

is 500 000 we're talking about 5 million  the second way of doing it is fractionalized  

investment in trust needs so that's  when your broker pairs you up with  

uh other high net worth individuals and uh they  put you guys on the same note so that way let's  

say you have a million dollars to invest you  need 10 properties so you go in fractionally  

say average loan amount 500 000 times 10  the broker will put you in that 500 000 loan  

as uh one fifth uh interest so you'll be  fractional a hundred thousand fifty thousand two  

hundred thousand okay uh this is a more passive  way your broker takes care of you of everything  

services administration sourcing deals and you  have your name on uh i don't know okay so uh

there is a little bit of a problem with that the  way i see it if things go wrong and there's five  

ten investors on the same trust deeds you're  gonna have uh five ten attorneys in your office  

okay so uh be very careful again it still requires  a certain level of sophistication you need to  

understand what you're doing or you really need  to have a trusted partner that handles this for  

you the new way of fractionalized investing is a  fund is a pool of investors uh created as a fund  

there's different fund structures but it's the  same as fractionalized but the difference is uh  

everything is in a fund's name so i manage lbc  capital income fund it's an llc we have investors  

pledging money into the fund and the fund goes  as a trustee investor on uh uh the fund becomes  

uh the lender not uh you individually at  five ten twenty percent of the note okay  

so the fund is a new structure uh it's absolutely  passive you invest in a fund the fund invests in  

the trustees so uh in my opinion there's really  i personally don't like fractionalized investing  

i like the individual model uh or i like the  fun model obviously since i manage the fund  

uh i'm promoting the fund model but it's uh there  is a board of directors there is a loan committee  

that reviews the deals and individual  partners of the in the fund they are not uh  

they're really passive they don't call me and  say hey boris which deal you're investing in  

every year we disclose detailed information about  the fund and uh we present that information to  

our investors but we don't have fund members fund  investors calling us say hey why did you do that  

multi-family building in uh in los angeles so  uh it's really it's passive for the investors  

you sit back you get interest you get your  distribution at the end of the month and  

you you're not involved in  day-to-day you're also diversified  

geographically you're diversified by property  type and you're diversified within that fund

there's different funds out there guys so some  funds they invest in nationwide some funds like  

ours we invest in california primarily some funds  are leveraged some funds are not some funds uh go  

more aggressive than others some funds go really  aggressive offering high higher yields some funds  

uh really looking at capital preservation with  the lower risks some funds only deal with default  

notes and some funds actually buy and develop  real estate so each fund manager has their own  

track record and each fund manager has their  own structure there's funds out there financing  

wheat facilities only there's fun uh there's funds  out there financing uh retirement communities so  

uh there's a lot of opportunities but uh trustee  should be a part of any portfolio for accredited  

investors okay so guys we're talking about  accredited investors only guys with the liquidity  

with the uh with capital of a 1 million  plus okay we're talking about big boys

okay so what does lbc capital what is our  strategy so this is our first fund and we're  

looking to open another one that's going to  be a little bit more aggressive but this is a  

capital preservation fund that pays roughly  eight percent our target return is eight  

percent per year this is very safe we only have  uh very limited amount of second trust deeds  

we're not leveraged yet though we will get some  leverage in the future uh we're very conservative  

and uh we will open something a little  bit more aggressive so stay tuned  

uh we're primarily in california we're  primarily finance first trust deeds first loans

we only finance areas that we know and uh that's  pretty much it i have my own money in it my  

partners my family has that's actually how the  fund started so we're we're fairly significantly  

vested financially in uh in this fund so that's  that's our that's our model there's tunnel funds  

out there like i said but talk to every fund  manager individually and everybody has has a  

track record we have nine or ten years of audited  financial statements by the way each fund gets  

gets out of the financial statements at the  end of the year by independent cpa firm so  

thank you guys please subscribe down  below like the video if you have any  

thoughts we're going to do something a little bit  more in-depth in the future uh but this is really  

trustee uh investing 101 should be part of every  accredited investor's portfolio you're pretty much  

becoming like one of the big boys whether you  do it individually or as part of the fund you  

are invested in real estate it's different than  a reit in a sense reits have real estate risks  

and stock market risks because they're publicly  traded okay private funds uh you don't have stock  

market risk it's only real estate risks but we'll  do another segment on on the risks thank you guys