Second Trust Deeds Explained

When the money stops flowing — the party is over.

This is precisely what you don't want to happen, especially when you are in the middle of financing or refinancing a commercial property, expanding your business, or settling urgent and timely financial matters. 

Whether you qualify for a bank loan or not, another option exists that can move you forward with your financial endeavors: An option that provides immediate capital for your time-sensitive or complex cash-out transaction.

Junior Financing 101

Knowing how second debt financing operates is essential if you’re ready to jump at the chance to secure a second trust deed private loan from a leading investment firm.

In its pure form, all deeds of trusts (whether first or second liens) are legal documents of a financial loan agreement between two parties. The deeds of trusts are promissory notes that the borrower will repay the lender in a fixed timeframe. In the case of real estate, the property is used by the lender as a pledge of security.

The second deed of trust allows a property owner to borrow additional funding beyond and subordinate to the first trust deed. The second trust deed effectively acts as a junior lien to the first.  Acquiring junior debt on your asset using private party money usually is quick, efficient, and reasonably priced.

Significantly More

Private Money Second Trust Deeds offer so much more to the borrowing community than do banks.  Consider the following:

As you can see, second trust deeds from private lenders offer substantial versatility compared to second trust deeds provided by banks.  

There isn’t a project that you can’t accomplish with a $1.5 million max loan from a private money second trust deed. Furthermore, when time is of the essence, short closing and loan processing times with private money second trust deeds are the best financing options available.

How Private Client Investments, Inc Can Serve You 

Private Client Investing is here for you if you require a second trust deed for a real estate loan in California. Private Client Investments, Inc  offers seamless funding solutions through rigorous underwriting, due diligence, and attention to every detail. Through Private Client Investing, you can harness the power of private money second trust deeds to accomplish your financial objectives.

Why Private Party Commercial Loans Are Better Than Bank Loans

Projects need funding. Conventional commercial loans are often the default choice, but are they the smartest? 

What is a commercial bank loan?
According to Entrepreneur's A Basic Guide to Bank-Term Loans, standard commercial loans are term loans that are used to finance major business investments or acquisitions with both intermediate and long-term loans available. They typically have fixed interest rates, a maturity date, and monthly or quarterly payments. They may also require collateral to secure the loan.

 Though banks immediately come to mind when finance is needed, they are extremely picky with strict requirements. You might not qualify due to a high down payment requirement, a below-average credit score, or insufficient income. What's worse, it could take up to 90 days for a decision to be made. That's a lot of time wasted -- a delay that prolongs the amount of time until a project can turn a profit. Bank loans also tend to have long terms with hefty prepayment penalties. For those looking to flip a property, taking out a 20- or 30-year bank loan might not make sense.

 What is a private loan?
A private loan comes from a private lender, not a bank. According to The Balance - Small Business, private financing tends to be much more flexible with no set lending requirements. The lender and borrower work out their own terms.

Private party commercial loans are an alternative with numerous benefits. Private lenders tend to be less concerned about personal creditworthiness and more interested in the project's potential.

Benefits of private party commercial loans include:

•Flexible lending requirements – The borrower and lender come to their own terms.

•Fast funding -- A project's funding can be secured quickly. Faster access to capital means the project can get started right away. 

•Easy to qualify -- Qualifying for a private commercial loan may be easier than qualifying for a bank loan. The merits of the project can counteract any shortcomings the borrower’s personal credit history might have.

•Short approval process -- Rather than waiting months to get approved, an answer usually arrives within a week or two. Again, the sooner your loan is approved, the sooner you have access to capital, and the sooner you can put that money to work.

•Short loan terms -- Private party commercial loans are generally short-term loans, making them ideal for certain commercial real estate projects. For example, if you need to quickly renovate an office building before selling or leasing it, a short-term loan could be preferable to a 30-year mortgage. They're also a good choice for situations where a property needs short-term funding to get started before ultimately securing a conventional term loan once it’s underway.

What Else You Need to Know about Private Party Commercial Loans

Private party commercial loans may come with a higher interest rate than conventional loans. But don't let that put you off from exploring this option. Weigh the interest rate difference with some of the other potential cost savings by going the private party route such as lower closing costs, fewer delays, faster funding, shorter-term, and no prepayment penalty.

This type of business funding isn't for everyone. But for many, a private party loan is a much better choice than a conventional bank loan. Contact us today to see if private funding makes sense for your project.