WHY TRUST DEED INVESTMENTS?

There are many factors to consider when making the decision to invest in trust deeds (TDs).

This section goes through these factors in detail in order to help you prepare to make a TD investment decision.

Retail VS. Wholesale 

We all know the difference. However, have you ever considered this concept for your interest bearing investments? Collecting interest at the retail rate is a truly superior method of collecting a high rate of interest on your funds, commensurate with whatever level of safety that you prefer. Think about it; most dollar denominated investments pay only wholesale rates of interest while that company reinvests your money and keeps the difference as its profit. You earn the retail interest rate by placing your funds through R.C. Temme Corporation, directly with the end user, the borrower. The companies who want to pay you only a wholesale rate of interest simply can’t compete with the combination of safety and yield that is available by retailing your money directly to real estate borrowers. As an investor client of RCTC, you avail yourself of the wealth of knowledge that we have accumulated during 37 years in the Trust Deed (TD) investment business. Interest payments from your TD investments are collected and forwarded to you as received. You can earn that retail rate of interest by two methods: Through RCTC you can invest your funds directly into an actual mortgage loan (a TD investment). Alternately, you can reach the end user by investing your funds in the RCTC Diversified Mortgage Fund, LLC – a fund managed by RCTC. Utilizing these methods, RCTC acts as a buffer between you and the borrower.

Risk 

The goal when making a TD investment is that you collect your high rate of accruing interest and eventually your original principal investment. When that process fails, through the foreclosure process, you may acquire title to the property securing your TD investment. Safety is found in loaning such a low percentage of the value of the securing property that the borrower is not likely to allow you to foreclose and acquire the property for such a low price. In the event it becomes required, R. C. Temme Corporation as your loan service agent would administer the foreclosure process on your behalf. Rehabilitation and/or resale of the foreclosed property can usually be conducted by the property management affiliate of R.C. Temme Corporation. Your investment in mortgage loans through RCTC will, on average, enjoy protection from a level of remaining equity in the securing property than is a higher percentage of remaining equity than is typically required by banks and other retail lenders when they lend on the same type of property. The borrower’s income, assets and credit rating may affect the level of your security; however, these issues are more important as the loan to value ratio of your TD investment increases. Conversely, income, assets and credit become less important as the loan to value ratio of your loan declines; this is because a declining loan to value ratio means more remaining equity is available to protect your investment. You can also obtain additional safety levels by allocating very small amounts of your capital to a number of different loans. This approach provides TD investors with both borrower and geographic diversification. You can normally achieve diversification most easily by investing in the RCTC Diversified Mortgage Fund, LLC.

Benefit(s) 

A risk/benefit analysis of any investment is one of the basic parameters in determining the favorability of that investment. R. C. Temme Corporation challenges you to submit a more favorable risk benefit analysis for any dollar denominated investment than what you will find with TD investments. The secret, again, is collecting a retail rate of interest when most other investment options involve collecting a wholesale rate of interest. Many investors like the opportunity to choose higher loan to value ratios (LTVs) in exchange for higher yields when secured by property or borrower qualifications that they like. You can also enjoy the option to select a loan with a lower rate of yield in exchange for a lower LTV which normally represents a higher safety margin. Additionally, consider the following:
* Most investors have owned a home or other property. Therefore, most investors have already dealt with the TD investor’s worst case scenario; owning and reselling the underlying property.
* Determining at how low a price you’d be willing to own the underlying property is the greatest challenge when deciding into which TD you should invest. For most investors, that’s much easier than the level of diligence required for other higher yielding investments.
* Investors wanting to avoid the time or effort in making these decisions but still want a retail rate of interest on their funds can opt for participation in the RCTC Diversified Mortgage Fund, LLC where R. C. Temme Corporation  as the fund administrator makes these decisions on your behalf.

Liquidity

Bureau of Real Estate Regulations forbid RCTC from promising to repurchase or resell your TD investments. However, through RCTC you have several options to enhance your liquidity.
1. You can diversify the same amount of investment capital into more but smaller individual TD investments in order to take advantage of the likelihood of early payoffs.
2. You can take a percentage of your TD investments in shorter term TDs in order to assure near term loan maturities.
3. You can ladder your loan maturities to allow them to mature over a wide time frame, possibly supplemented by early loan payoffs.
4. You can bundle your loan maturities into that time period when you most expect to need those funds.
5. Regarding 30 year loans secured by owner occupied homes, prior to July 2007, R. C. Temme Corporation’s investors enjoyed average payoffs of their TD investments of two to three years. Today, we estimate that average period to be in the three to seven year range. These average payoff periods provide a strong element of liquidity to investors owning small portions of many different TD loans.
6. The RCTC Diversified Mortgage Fund also provides conditional liquidity after two years. (See the offering circular for more details)

The role of RCTC 

Services your TD investments and also administers the RCTC Diversified Mortgage Fund, LLC, all on your behalf. When you invest in a specific TD loan, we provide to you with pertinent information required to make your individual TD investment decision. That includes both positive and negative information that may affect your investment decision. Last, RCTC arranges for an independent CPA to review its trust accounts on a quarterly basis. Those reviews are filed with the California Bureau of Real Estate. Further, those CPA reviews are available to our investor clients; the annual Review is mailed to our investor clients each year. The same CPA also audits the books of the RCTC Diversified Mortgage Fund, LLC on an annual basis. Copies of those CPA reports are filed with the CA Department of Corporations.

Can I Invest My IRA or Pension Plan in TDs or the RCTC Diversified Mortgage Fund, LLC? 

What better place to collect a high, retail rate of interest on your TD investments than in a tax deferred environment, such as an IRA or pension plan? Yes, you can invest in TDs, small portions of different TDs or into The RCTC Diversified Mortgage Fund, LLC through your IRA or pension plan. As trustee of your pension plan it’s particularly easy to invest in TDs for your plan; just select the investment you want; we’ll do the paperwork. When you utilize a third party as trustee for your IRA or pension plan, you’ll usually need to transfer the amount to be invested to a trustee that allows investment in TDs or The RCTC Diversified Mortgage Fund. Click here for a list of Trustees that allow TD investments or the RCTC Diversified Mortgage Fund.

How Can I Invest My Funds? 

Through RCTC you can choose two methods to invest in mortgage loans secured by TDs: 1. Many investors prefer to earn their interest by investing in the RCTC Diversified Mortgage fund, LLC, a fund invested in TDs, administered by RCTC and audited annually by an independent CPA firm. Ease of investment and diversification make the RCTC Diversified Mortgage Fund a popular and convenient method to earn a retail rate of interest. 2. You may choose to invest in all or small portions of a specific TD investment. Motivation typically might be the flexibility to select different property types to secure your TD investments. It may be to select higher yielding TD loans or the higher safety levels of a lower LTV, lower yielding TD investment.

About Us 

R.C. Temme Corporation, Real Estate Broker – CA Dept. of Real Estate #00531243 NMLS#295637, has been in the same location since 1976. We are well known for our technical expertise in analyzing and servicing loans. We have over 37 years of experience, integrity and dependability in offering and servicing Trust Deed Investments.