Investing in trust deeds with Fidelis Private Fund

Trust deeds and mortgages create liens on real estate, but a key difference is that trust deeds involve the borrower, the lender, and the trustee. In the event of a default, trust deeds allow for a faster, non-judicial foreclosure process, which can be more efficient and less costly than the judicial foreclosure process typically required with mortgages.

3. What are the benefits of Trust Deed Investing?

• Security: Investments are backed by real estate, providing a layer of security not found in stocks or bonds.
• Passive Income: Investors receive fixed income compounded monthly paid out quarterly, which can be higher than those from traditional bonds.
• Diversification: Trust deed investing allows investors to diversify their portfolios with an asset class that is not directly tied to the stock market.

IRA Eligibility: These investments can be made through an IRA, allowing for potential tax benefits.

Fidelis Private Fund secures your investment by ensuring each loan is backed by a trust deed recorded against a tangible property. This means that your investment is protected by the equity in the real estate, which significantly reduces the risk of loss.

Fidelis conducts thorough underwriting processes that evaluate the property’s value, market dynamics, and the borrower’s financial position. A key metric used is the Loan-to-Value (LTV) ratio, with lower ratios indicating a more secure investment. Additionally, the Fidelis considers the borrower’s property equity, the income-generating potential, and the borrower’s likelihood of repaying the loan.

As limited partners in Fidelis Private Fund, investors provide the funds that Fidelis uses to make loans. Fidelis handles all due diligence on behalf of its limited partners, leveraging its extensive management experience to research each investment opportunity thoroughly. This includes visiting the property site, reviewing the borrower’s financial history, and ensuring all necessary legal documents—such as the recorded deed of trust, title policy, and insurance—are properly in place.

While trust deed investments are generally considered secure due to the real estate backing, risks include borrower default and market value fluctuations. These risks are mitigated by low LTV ratios, conservative appraisals, significant borrower equity, and the use of experienced brokers who carefully vet each deal.
Fidelis employs a unique safeguard for investors called a Loan Loss Reserve, setting aside approximately 2% of its total outstanding loans to protect investors in case of borrower defaults. This strategy is rare among California mortgage funds.

Investors start receiving interest payments quarterly, compounded monthly, immediately after funding the loan. The payments are sent directly to the investor’s specified account.

As limited partners in Fidelis Private Fund, investors will receive a certificate of limited partnership, which serves as evidence of their ownership in a prorated share of all the loans made by the fund. As the lender, Fidelis retains and manages all essential legal documents on behalf of the limited partners. These documents include the recorded trust deed, title policy, property insurance, and the executed promissory note outlining the interest rate, payment amounts, and loan terms. This arrangement allows investors to benefit from diversification across multiple secured loans without having to handle the details or conduct their own due diligence.

In the event of a borrower default, Fidelis Private Fund takes swift action to foreclose on the property, thereby recovering the investment. The conservative LTV ratios and due diligence practices ensure that the properties have enough equity to cover the loan amount, even in the event of foreclosure.

Yes, trust deed investments are often considered more secure than stocks because they are backed by real estate, a tangible asset. Unlike stocks, which can be volatile and subject to market fluctuations, the real estate used as collateral in trust deed investments provides a degree of certainty and security.

The typical Loan-to-Value (LTV) ratio for trust deed investments with Fidelis Private Fund ranges from 30% to 75%, with a target portfolio average of 60%. This conservative LTV ratio provides a substantial equity cushion, offering additional security for your investment.

Yes, trust deed investments can be included in a self-directed IRA, allowing investors to potentially benefit from tax-deferred or tax-free growth, depending on the type of IRA.

Fidelis Private Fund has a proven track record of successful trust deed investing, underpinned by rigorous due diligence, conservative underwriting standards, and a commitment to investor security. Our experienced team works diligently to protect your investment while providing attractive returns.